Correlation Between AfreecaTV and Posco ICT

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

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

Diversification Opportunities for AfreecaTV and Posco ICT

-0.27

Correlation Coefficient

AfreecaTV  Posco ICT

Very good diversification

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

Pair Corralation between AfreecaTV and Posco ICT

Assuming the 90 days trading horizon AfreecaTV Co is expected to under-perform the Posco ICT. But the stock apears to be less risky and, when comparing its historical volatility, AfreecaTV Co is 1.11 times less risky than Posco ICT. The stock trades about -0.11 of its potential returns per unit of risk. The Posco ICT is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,120,000  in Posco ICT on October 11, 2024 and sell it today you would lose (35,000) from holding Posco ICT or give up 1.65% of portfolio value over 90 days.

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

AfreecaTV Co  vs.  Posco ICT

AfreecaTV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Posco ICT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Posco ICT 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AfreecaTV and Posco ICT

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

The idea behind AfreecaTV Co and Posco ICT 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.