Correlation Between Idaho Strategic and POSCO Holdings

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

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

Diversification Opportunities for Idaho Strategic and POSCO Holdings

0.76

Correlation Coefficient

Idaho Strategic  POSCO Holdings

Poor diversification

The 3 months correlation between Idaho and POSCO is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Idaho Strategic Resources and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Idaho Strategic 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 Idaho Strategic Resources 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 Idaho Strategic i.e., Idaho Strategic and POSCO Holdings go up and down completely randomly.

Pair Corralation between Idaho Strategic and POSCO Holdings

Considering the 90-day investment horizon Idaho Strategic Resources is expected to generate 2.22 times more return on investment than POSCO Holdings. However, Idaho Strategic is 2.22 times more volatile than POSCO Holdings. It trades about -0.13 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.47 per unit of risk. If you would invest  1,193  in Idaho Strategic Resources on September 22, 2024 and sell it today you would lose (144.00) from holding Idaho Strategic Resources or give up 12.07% of portfolio value over 90 days.

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

Idaho Strategic Resources  vs.  POSCO Holdings

Idaho Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idaho Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 unfluctuating performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Idaho Strategic and POSCO Holdings

The main advantage of trading using opposite Idaho Strategic and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idaho Strategic 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 Idaho Strategic Resources 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 Stocks Directory module to find actively traded stocks across global markets.