Correlation Between POSCO Holdings and Kyocera

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

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

Diversification Opportunities for POSCO Holdings and Kyocera

-0.49

Correlation Coefficient

POSCO Holdings  Kyocera

Very good diversification

The 3 months correlation between POSCO and Kyocera is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Kyocera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyocera 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 Kyocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyocera has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Kyocera go up and down completely randomly.

Pair Corralation between POSCO Holdings and Kyocera

Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Kyocera. In addition to that, POSCO Holdings is 1.58 times more volatile than Kyocera. It trades about -0.01 of its total potential returns per unit of risk. Kyocera is currently generating about 0.15 per unit of volatility. If you would invest  905.00  in Kyocera on November 29, 2024 and sell it today you would earn a total of  142.00  from holding Kyocera or generate 15.69% return on investment over 90 days.

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

POSCO Holdings  vs.  Kyocera

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. Despite nearly stable basic indicators, POSCO Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Kyocera

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kyocera are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kyocera reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and Kyocera

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

The idea behind POSCO Holdings and Kyocera 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.