Correlation Between POSCO Holdings and SKC

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

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

Diversification Opportunities for POSCO Holdings and SKC

-0.4

Correlation Coefficient

POSCO Holdings  SKC

Very good diversification

The 3 months correlation between POSCO and SKC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and SKC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKC Co 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 SKC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKC Co has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and SKC go up and down completely randomly.

Pair Corralation between POSCO Holdings and SKC

Assuming the 90 days trading horizon POSCO Holdings is expected to generate 0.66 times more return on investment than SKC. However, POSCO Holdings is 1.51 times less risky than SKC. It trades about 0.1 of its potential returns per unit of risk. SKC Co is currently generating about 0.04 per unit of risk. If you would invest  25,125,300  in POSCO Holdings on December 30, 2024 and sell it today you would earn a total of  4,074,700  from holding POSCO Holdings or generate 16.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

POSCO Holdings  vs.  SKC Co

POSCO Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSCO Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, POSCO Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

SKC Co

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SKC Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SKC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with POSCO Holdings and SKC

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

The idea behind POSCO Holdings and SKC Co 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.