Correlation Between Asia Technology and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Asia Technology 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 Asia Technology and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Technology Co and POSCO Holdings, you can compare the effects of market volatilities on Asia Technology 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 Asia Technology with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Technology and POSCO Holdings.
Diversification Opportunities for Asia Technology and POSCO Holdings
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and POSCO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Asia Technology Co and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Asia Technology 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 Asia Technology Co 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 Asia Technology i.e., Asia Technology and POSCO Holdings go up and down completely randomly.
Pair Corralation between Asia Technology and POSCO Holdings
Assuming the 90 days trading horizon Asia Technology Co is expected to under-perform the POSCO Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Asia Technology Co is 2.91 times less risky than POSCO Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The POSCO Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 25,967,700 in POSCO Holdings on December 22, 2024 and sell it today you would earn a total of 6,632,300 from holding POSCO Holdings or generate 25.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Asia Technology Co vs. POSCO Holdings
Performance |
Timeline |
Asia Technology |
POSCO Holdings |
Asia Technology and POSCO Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asia Technology and POSCO Holdings
The main advantage of trading using opposite Asia Technology and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Technology 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.Asia Technology vs. Sangsin Energy Display | Asia Technology vs. DC Media Co | Asia Technology vs. JYP Entertainment Corp | Asia Technology vs. YG Entertainment |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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