Correlation Between POSCO Thainox and News Network

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

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

Diversification Opportunities for POSCO Thainox and News Network

0.12

Correlation Coefficient

POSCO Thainox  News Network

Average diversification

The 3 months correlation between POSCO and News is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Thainox Public and News Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Network and POSCO Thainox 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 POSCO Thainox Public are associated (or correlated) with News Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Network has no effect on the direction of POSCO Thainox i.e., POSCO Thainox and News Network go up and down completely randomly.

Pair Corralation between POSCO Thainox and News Network

Assuming the 90 days trading horizon POSCO Thainox Public is expected to under-perform the News Network. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Thainox Public is 12.01 times less risky than News Network. The stock trades about -0.07 of its potential returns per unit of risk. The News Network is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.00  in News Network on October 26, 2024 and sell it today you would earn a total of  0.00  from holding News Network or generate 0.0% return on investment over 90 days.

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

POSCO Thainox Public  vs.  News Network

POSCO Thainox Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSCO Thainox Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

News Network

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in News Network are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, News Network disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Thainox and News Network

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

The idea behind POSCO Thainox Public and News Network 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 Global Correlations module to find global opportunities by holding instruments from different markets.