Correlation Between POSCO Holdings and Newmont
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Newmont 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 Newmont into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Newmont, you can compare the effects of market volatilities on POSCO Holdings and Newmont 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 Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Newmont.
Diversification Opportunities for POSCO Holdings and Newmont
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between POSCO and Newmont is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Newmont go up and down completely randomly.
Pair Corralation between POSCO Holdings and Newmont
Assuming the 90 days horizon POSCO Holdings is expected to generate 1.13 times less return on investment than Newmont. In addition to that, POSCO Holdings is 1.43 times more volatile than Newmont. It trades about 0.1 of its total potential returns per unit of risk. Newmont is currently generating about 0.16 per unit of volatility. If you would invest 3,631 in Newmont on December 27, 2024 and sell it today you would earn a total of 769.00 from holding Newmont or generate 21.18% 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. Newmont
Performance |
Timeline |
POSCO Holdings |
Newmont |
POSCO Holdings and Newmont Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POSCO Holdings and Newmont
The main advantage of trading using opposite POSCO Holdings and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Newmont 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 Newmont will offset losses from the drop in Newmont's long position.POSCO Holdings vs. PennyMac Mortgage Investment | POSCO Holdings vs. Gold Road Resources | POSCO Holdings vs. AGNC INVESTMENT | POSCO Holdings vs. Yunnan Water Investment |
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Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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