Correlation Between POSCO Holdings and Companhia Siderurgica
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Companhia Siderurgica 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 Companhia Siderurgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Companhia Siderurgica Nacional, you can compare the effects of market volatilities on POSCO Holdings and Companhia Siderurgica 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 Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Companhia Siderurgica.
Diversification Opportunities for POSCO Holdings and Companhia Siderurgica
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Companhia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica 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 Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Companhia Siderurgica go up and down completely randomly.
Pair Corralation between POSCO Holdings and Companhia Siderurgica
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Companhia Siderurgica. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.51 times less risky than Companhia Siderurgica. The stock trades about -0.19 of its potential returns per unit of risk. The Companhia Siderurgica Nacional is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Companhia Siderurgica Nacional on November 1, 2024 and sell it today you would lose (39.00) from holding Companhia Siderurgica Nacional or give up 19.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Companhia Siderurgica Nacional
Performance |
| Timeline |
| POSCO Holdings |
| Companhia Siderurgica |
POSCO Holdings and Companhia Siderurgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Companhia Siderurgica
The main advantage of trading using opposite POSCO Holdings and Companhia Siderurgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Companhia Siderurgica 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 Companhia Siderurgica will offset losses from the drop in Companhia Siderurgica'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 |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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