Correlation Between POSCO Holdings and Victory Energy
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Victory 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 Victory 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 Victory Energy Corp, you can compare the effects of market volatilities on POSCO Holdings and Victory 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 Victory Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Victory Energy.
Diversification Opportunities for POSCO Holdings and Victory Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Victory is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Victory Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Energy Corp 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 Victory Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Energy Corp has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Victory Energy go up and down completely randomly.
Pair Corralation between POSCO Holdings and Victory Energy
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Victory Energy. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 40.08 times less risky than Victory Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Victory Energy Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Victory Energy Corp on September 3, 2024 and sell it today you would lose (23.00) from holding Victory Energy Corp or give up 43.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
POSCO Holdings vs. Victory Energy Corp
Performance |
| Timeline |
| POSCO Holdings |
| Victory Energy Corp |
POSCO Holdings and Victory Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Victory Energy
The main advantage of trading using opposite POSCO Holdings and Victory Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Victory 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 Victory Energy will offset losses from the drop in Victory 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 |
| Victory Energy vs. Expro Group Holdings | Victory Energy vs. ChampionX | Victory Energy vs. Ranger Energy Services | Victory 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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