Correlation Between POSCO Holdings and ATON

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

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

Diversification Opportunities for POSCO Holdings and ATON

-0.27

Correlation Coefficient

POSCO Holdings  ATON

Very good diversification

The 3 months correlation between POSCO and ATON is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc 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 ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and ATON go up and down completely randomly.

Pair Corralation between POSCO Holdings and ATON

Assuming the 90 days trading horizon POSCO Holdings is expected to generate 0.4 times more return on investment than ATON. However, POSCO Holdings is 2.47 times less risky than ATON. It trades about 0.11 of its potential returns per unit of risk. ATON Inc is currently generating about 0.02 per unit of risk. If you would invest  24,778,400  in POSCO Holdings on December 3, 2024 and sell it today you would earn a total of  2,471,600  from holding POSCO Holdings or generate 9.97% return on investment over 90 days.

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

POSCO Holdings  vs.  ATON Inc

POSCO Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, POSCO Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ATON Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATON Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and ATON

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

The idea behind POSCO Holdings and ATON Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.