Correlation Between Prospera Energy and POSCO Holdings

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

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

Diversification Opportunities for Prospera Energy and POSCO Holdings

-0.13

Correlation Coefficient

Prospera Energy  POSCO Holdings

Good diversification

The 3 months correlation between Prospera and POSCO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Prospera Energy and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Prospera Energy 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 Prospera Energy 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 Prospera Energy i.e., Prospera Energy and POSCO Holdings go up and down completely randomly.

Pair Corralation between Prospera Energy and POSCO Holdings

Assuming the 90 days horizon Prospera Energy is expected to generate 1.24 times less return on investment than POSCO Holdings. In addition to that, Prospera Energy is 2.26 times more volatile than POSCO Holdings. It trades about 0.03 of its total potential returns per unit of risk. POSCO Holdings is currently generating about 0.09 per unit of volatility. If you would invest  4,532  in POSCO Holdings on December 22, 2024 and sell it today you would earn a total of  661.00  from holding POSCO Holdings or generate 14.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Prospera Energy  vs.  POSCO Holdings

Prospera Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prospera Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Prospera Energy 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 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, POSCO Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prospera Energy and POSCO Holdings

The main advantage of trading using opposite Prospera Energy and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospera Energy 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 Prospera Energy 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.