Correlation Between Aperam PK and POSCO Holdings

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

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

Diversification Opportunities for Aperam PK and POSCO Holdings

0.25

Correlation Coefficient

Aperam PK  POSCO Holdings

Modest diversification

The 3 months correlation between Aperam and POSCO is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Aperam PK 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 Aperam PK 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 Aperam PK i.e., Aperam PK and POSCO Holdings go up and down completely randomly.

Pair Corralation between Aperam PK and POSCO Holdings

Assuming the 90 days horizon Aperam PK is expected to generate 1.12 times more return on investment than POSCO Holdings. However, Aperam PK is 1.12 times more volatile than POSCO Holdings. It trades about 0.0 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.01 per unit of risk. If you would invest  3,437  in Aperam PK on October 21, 2024 and sell it today you would lose (814.00) from holding Aperam PK or give up 23.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Aperam PK  vs.  POSCO Holdings

Aperam PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperam PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

POSCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain fairly 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 Aperam PK and POSCO Holdings

The main advantage of trading using opposite Aperam PK and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aperam PK 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 Aperam PK 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.