Correlation Between POSCO Holdings and Link Real

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

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

Diversification Opportunities for POSCO Holdings and Link Real

0.1

Correlation Coefficient

POSCO Holdings  Link Real

Average diversification

The 3 months correlation between POSCO and Link is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Link Real go up and down completely randomly.

Pair Corralation between POSCO Holdings and Link Real

Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Link Real. In addition to that, POSCO Holdings is 2.14 times more volatile than Link Real Estate. It trades about -0.01 of its total potential returns per unit of risk. Link Real Estate is currently generating about 0.05 per unit of volatility. If you would invest  419.00  in Link Real Estate on November 29, 2024 and sell it today you would earn a total of  14.00  from holding Link Real Estate or generate 3.34% return on investment over 90 days.

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

POSCO Holdings  vs.  Link Real Estate

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.

Link Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Link Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with POSCO Holdings and Link Real

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

The idea behind POSCO Holdings and Link Real Estate 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.