Correlation Between XLMedia PLC and POSCO Holdings

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

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

Diversification Opportunities for XLMedia PLC and POSCO Holdings

-0.15

Correlation Coefficient

XLMedia PLC  POSCO Holdings

Good diversification

The 3 months correlation between XLMedia and POSCO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and POSCO Holdings go up and down completely randomly.

Pair Corralation between XLMedia PLC and POSCO Holdings

Assuming the 90 days horizon XLMedia PLC is expected to generate 1.12 times less return on investment than POSCO Holdings. In addition to that, XLMedia PLC is 1.48 times more volatile than POSCO Holdings. It trades about 0.06 of its total potential returns per unit of risk. POSCO Holdings is currently generating about 0.1 per unit of volatility. If you would invest  4,040  in POSCO Holdings on December 26, 2024 and sell it today you would earn a total of  700.00  from holding POSCO Holdings or generate 17.33% return on investment over 90 days.

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

XLMedia PLC  vs.  POSCO Holdings

XLMedia PLC

Risk-Adjusted Performance

Insignificant

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

POSCO Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSCO Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, POSCO Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and POSCO Holdings

The main advantage of trading using opposite XLMedia PLC and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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.

The idea behind XLMedia PLC and POSCO Holdings 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.