Correlation Between POSCO Holdings and Koil Energy
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Koil Energy 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 Koil Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Koil Energy Solutions, you can compare the effects of market volatilities on POSCO Holdings and Koil Energy 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 Koil Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Koil Energy.
Diversification Opportunities for POSCO Holdings and Koil Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and Koil is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Koil Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koil Energy Solutions 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 Koil Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koil Energy Solutions has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Koil Energy go up and down completely randomly.
Pair Corralation between POSCO Holdings and Koil Energy
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Koil Energy. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 2.16 times less risky than Koil Energy. The stock trades about -0.25 of its potential returns per unit of risk. The Koil Energy Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Koil Energy Solutions on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Koil Energy Solutions or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Koil Energy Solutions
Performance |
| Timeline |
| POSCO Holdings |
| Koil Energy Solutions |
POSCO Holdings and Koil Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Koil Energy
The main advantage of trading using opposite POSCO Holdings and Koil Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Koil Energy 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 Koil Energy will offset losses from the drop in Koil Energy'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 |
| Koil Energy vs. Expro Group Holdings | Koil Energy vs. ChampionX | Koil Energy vs. Ranger Energy Services | Koil Energy vs. Cactus Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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