Correlation Between Touchstone Exploration and POSCO Holdings

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

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

Diversification Opportunities for Touchstone Exploration and POSCO Holdings

-0.04

Correlation Coefficient

Touchstone Exploration  POSCO Holdings

Good diversification

The 3 months correlation between Touchstone and POSCO is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Exploration and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Touchstone Exploration 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 Touchstone Exploration 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 Touchstone Exploration i.e., Touchstone Exploration and POSCO Holdings go up and down completely randomly.

Pair Corralation between Touchstone Exploration and POSCO Holdings

Assuming the 90 days horizon Touchstone Exploration is expected to under-perform the POSCO Holdings. In addition to that, Touchstone Exploration is 1.42 times more volatile than POSCO Holdings. It trades about -0.1 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  4,256  in POSCO Holdings on December 2, 2024 and sell it today you would earn a total of  368.00  from holding POSCO Holdings or generate 8.65% return on investment over 90 days.

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

Touchstone Exploration  vs.  POSCO Holdings

Touchstone Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

POSCO Holdings

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Touchstone Exploration and POSCO Holdings

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

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.