Correlation Between POSCO Holdings and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Yanzhou Coal 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 Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Yanzhou Coal Mining, you can compare the effects of market volatilities on POSCO Holdings and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Yanzhou Coal.
Diversification Opportunities for POSCO Holdings and Yanzhou Coal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and Yanzhou is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Yanzhou Coal go up and down completely randomly.
Pair Corralation between POSCO Holdings and Yanzhou Coal
Considering the 90-day investment horizon POSCO Holdings is expected to generate 0.43 times more return on investment than Yanzhou Coal. However, POSCO Holdings is 2.32 times less risky than Yanzhou Coal. It trades about -0.08 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.04 per unit of risk. If you would invest 6,725 in POSCO Holdings on September 2, 2024 and sell it today you would lose (1,563) from holding POSCO Holdings or give up 23.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Yanzhou Coal Mining
Performance |
| Timeline |
| POSCO Holdings |
| Yanzhou Coal Mining |
POSCO Holdings and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Yanzhou Coal
The main advantage of trading using opposite POSCO Holdings and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal'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 |
| Yanzhou Coal vs. Geo Energy Resources | Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Bukit Asam Tbk | Yanzhou Coal vs. Thungela Resources Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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