Correlation Between Posco ICT and Atinum Investment

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

By analyzing existing cross correlation between Posco ICT and Atinum Investment Co, you can compare the effects of market volatilities on Posco ICT and Atinum 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 ICT with a short position of Atinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and Atinum Investment.

Diversification Opportunities for Posco ICT and Atinum Investment

0.35

Correlation Coefficient

Posco ICT  Atinum Investment

Weak diversification

The 3 months correlation between Posco and Atinum is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT and Atinum Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atinum Investment and Posco ICT 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 ICT are associated (or correlated) with Atinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atinum Investment has no effect on the direction of Posco ICT i.e., Posco ICT and Atinum Investment go up and down completely randomly.

Pair Corralation between Posco ICT and Atinum Investment

Assuming the 90 days trading horizon Posco ICT is expected to generate 1.62 times more return on investment than Atinum Investment. However, Posco ICT is 1.62 times more volatile than Atinum Investment Co. It trades about 0.06 of its potential returns per unit of risk. Atinum Investment Co is currently generating about -0.01 per unit of risk. If you would invest  2,080,000  in Posco ICT on December 1, 2024 and sell it today you would earn a total of  230,000  from holding Posco ICT or generate 11.06% return on investment over 90 days.

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

Posco ICT  vs.  Atinum Investment Co

Posco ICT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Posco ICT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Posco ICT sustained solid returns over the last few months and may actually be approaching a breakup point.

Atinum Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Posco ICT and Atinum Investment

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

The idea behind Posco ICT and Atinum Investment 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.