Correlation Between POSCO Holdings and Erste Group
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Erste Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining POSCO Holdings and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Erste Group Bank, you can compare the effects of market volatilities on POSCO Holdings and Erste Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in POSCO Holdings with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Erste Group.
Diversification Opportunities for POSCO Holdings and Erste Group
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between POSCO and Erste is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and POSCO Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on POSCO Holdings are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Erste Group go up and down completely randomly.
Pair Corralation between POSCO Holdings and Erste Group
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Erste Group. In addition to that, POSCO Holdings is 1.26 times more volatile than Erste Group Bank. It trades about -0.03 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.17 per unit of volatility. If you would invest 2,874 in Erste Group Bank on October 9, 2024 and sell it today you would earn a total of 136.00 from holding Erste Group Bank or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Erste Group Bank
Performance |
| Timeline |
| POSCO Holdings |
| Erste Group Bank |
POSCO Holdings and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Erste Group
The main advantage of trading using opposite POSCO Holdings and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Erste Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erste Group will offset losses from the drop in Erste Group's long position.| POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Universal Stainless Alloy | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR |
| Erste Group vs. Eurobank Ergasias Services | Erste Group vs. Standard Bank Group | Erste Group vs. Bank Central Asia | Erste Group vs. PSB Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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