Correlation Between POSCO Holdings and Hartford Financial

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

By analyzing existing cross correlation between POSCO Holdings and The Hartford Financial, you can compare the effects of market volatilities on POSCO Holdings and Hartford Financial 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 Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Hartford Financial.

Diversification Opportunities for POSCO Holdings and Hartford Financial

-0.32

Correlation Coefficient

POSCO Holdings  Hartford Financial

Very good diversification

The 3 months correlation between POSCO and Hartford is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Hartford Financial go up and down completely randomly.

Pair Corralation between POSCO Holdings and Hartford Financial

Assuming the 90 days horizon POSCO Holdings is expected to generate 7.3 times less return on investment than Hartford Financial. In addition to that, POSCO Holdings is 2.44 times more volatile than The Hartford Financial. It trades about 0.0 of its total potential returns per unit of risk. The Hartford Financial is currently generating about 0.07 per unit of volatility. If you would invest  6,978  in The Hartford Financial on October 5, 2024 and sell it today you would earn a total of  3,622  from holding The Hartford Financial or generate 51.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

POSCO Holdings  vs.  The Hartford Financial

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

The Hartford Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hartford Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with POSCO Holdings and Hartford Financial

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

The idea behind POSCO Holdings and The Hartford Financial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.