Correlation Between POSCO Holdings and Churchill Downs

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

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

Diversification Opportunities for POSCO Holdings and Churchill Downs

-0.73

Correlation Coefficient

POSCO Holdings  Churchill Downs

Pay attention - limited upside

The 3 months correlation between POSCO and Churchill is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and POSCO Holdings 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 Holdings are associated (or correlated) with Churchill Downs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Churchill Downs go up and down completely randomly.

Pair Corralation between POSCO Holdings and Churchill Downs

Assuming the 90 days horizon POSCO Holdings is expected to generate 2.19 times more return on investment than Churchill Downs. However, POSCO Holdings is 2.19 times more volatile than Churchill Downs Incorporated. It trades about 0.06 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about -0.2 per unit of risk. If you would invest  4,100  in POSCO Holdings on December 29, 2024 and sell it today you would earn a total of  340.00  from holding POSCO Holdings or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

POSCO Holdings  vs.  Churchill Downs Incorporated

POSCO Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in POSCO Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, POSCO Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Churchill Downs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Churchill Downs Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic 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.

Pair Trading with POSCO Holdings and Churchill Downs

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

The idea behind POSCO Holdings and Churchill Downs Incorporated 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.