Correlation Between POSCO Holdings and Southern Arc
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Southern Arc 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 Southern Arc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Southern Arc Minerals, you can compare the effects of market volatilities on POSCO Holdings and Southern Arc 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 Southern Arc. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Southern Arc.
Diversification Opportunities for POSCO Holdings and Southern Arc
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between POSCO and Southern is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Southern Arc Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Arc Minerals 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 Southern Arc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Arc Minerals has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Southern Arc go up and down completely randomly.
Pair Corralation between POSCO Holdings and Southern Arc
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Southern Arc. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 5.61 times less risky than Southern Arc. The stock trades about -0.24 of its potential returns per unit of risk. The Southern Arc Minerals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Southern Arc Minerals on October 24, 2024 and sell it today you would earn a total of 1.27 from holding Southern Arc Minerals or generate 127.0% 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. Southern Arc Minerals
Performance |
| Timeline |
| POSCO Holdings |
| Southern Arc Minerals |
POSCO Holdings and Southern Arc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Southern Arc
The main advantage of trading using opposite POSCO Holdings and Southern Arc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Southern Arc 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 Southern Arc will offset losses from the drop in Southern Arc'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 |
| Southern Arc vs. Boyd Gaming | Southern Arc vs. Mid Atlantic Home Health | Southern Arc vs. Motorsport Gaming Us | Southern Arc vs. City Office REIT |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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