Correlation Between POSCO Holdings and Malacca Straits
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Malacca Straits 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 Malacca Straits into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Malacca Straits Acq, you can compare the effects of market volatilities on POSCO Holdings and Malacca Straits 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 Malacca Straits. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Malacca Straits.
Diversification Opportunities for POSCO Holdings and Malacca Straits
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between POSCO and Malacca is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Malacca Straits Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Straits Acq 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 Malacca Straits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Straits Acq has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Malacca Straits go up and down completely randomly.
Pair Corralation between POSCO Holdings and Malacca Straits
Considering the 90-day investment horizon POSCO Holdings is expected to generate 1.44 times less return on investment than Malacca Straits. In addition to that, POSCO Holdings is 2.08 times more volatile than Malacca Straits Acq. It trades about 0.01 of its total potential returns per unit of risk. Malacca Straits Acq is currently generating about 0.03 per unit of volatility. If you would invest 1,024 in Malacca Straits Acq on September 5, 2024 and sell it today you would earn a total of 36.00 from holding Malacca Straits Acq or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 26.46% |
| Values | Daily Returns |
POSCO Holdings vs. Malacca Straits Acq
Performance |
| Timeline |
| POSCO Holdings |
| Malacca Straits Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
POSCO Holdings and Malacca Straits Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Malacca Straits
The main advantage of trading using opposite POSCO Holdings and Malacca Straits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Malacca Straits 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 Malacca Straits will offset losses from the drop in Malacca Straits' 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 |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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