Correlation Between POSCO Holdings and Eugene Investment

Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Eugene Investment 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 Eugene Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between POSCO Holdings and Eugene Investment Securities, you can compare the effects of market volatilities on POSCO Holdings and Eugene Investment 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 Eugene Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Eugene Investment.

Diversification Opportunities for POSCO Holdings and Eugene Investment

0.92

Correlation Coefficient

POSCO Holdings  Eugene Investment

Almost no diversification

The 3 months correlation between POSCO and Eugene is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Eugene Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Investment 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 Eugene Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Investment has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Eugene Investment go up and down completely randomly.

Pair Corralation between POSCO Holdings and Eugene Investment

Assuming the 90 days trading horizon POSCO Holdings is expected to generate 0.85 times more return on investment than Eugene Investment. However, POSCO Holdings is 1.17 times less risky than Eugene Investment. It trades about -0.16 of its potential returns per unit of risk. Eugene Investment Securities is currently generating about -0.15 per unit of risk. If you would invest  31,000,000  in POSCO Holdings on September 15, 2024 and sell it today you would lose (3,900,000) from holding POSCO Holdings or give up 12.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

POSCO Holdings  vs.  Eugene Investment Securities

POSCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Eugene Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with POSCO Holdings and Eugene Investment

The main advantage of trading using opposite POSCO Holdings and Eugene Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Eugene Investment 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 Eugene Investment will offset losses from the drop in Eugene Investment's long position.

The idea behind POSCO Holdings and Eugene Investment Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.