Correlation Between Trican Well and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Trican Well and POSCO Holdings 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 Trican Well and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trican Well Service and POSCO Holdings, you can compare the effects of market volatilities on Trican Well and POSCO Holdings 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 Trican Well with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and POSCO Holdings.
Diversification Opportunities for Trican Well and POSCO Holdings
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Trican and POSCO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Trican Well 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 Trican Well Service are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Trican Well i.e., Trican Well and POSCO Holdings go up and down completely randomly.
Pair Corralation between Trican Well and POSCO Holdings
Assuming the 90 days horizon Trican Well Service is expected to generate 0.7 times more return on investment than POSCO Holdings. However, Trican Well Service is 1.42 times less risky than POSCO Holdings. It trades about 0.09 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.19 per unit of risk. If you would invest 338.00 in Trican Well Service on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Trican Well Service or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Trican Well Service vs. POSCO Holdings
Performance |
| Timeline |
| Trican Well Service |
| POSCO Holdings |
Trican Well and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trican Well and POSCO Holdings
The main advantage of trading using opposite Trican Well and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trican Well position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Trican Well vs. STEP Energy Services | Trican Well vs. Koil Energy Solutions | Trican Well vs. TerraVest Industries | Trican Well vs. Source Energy Services |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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