Correlation Between POSCO Holdings and Sempra

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

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

Diversification Opportunities for POSCO Holdings and Sempra

-0.83

Correlation Coefficient

POSCO Holdings  Sempra

Pay attention - limited upside

The 3 months correlation between POSCO and Sempra is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra 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 Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Sempra go up and down completely randomly.

Pair Corralation between POSCO Holdings and Sempra

Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Sempra. In addition to that, POSCO Holdings is 2.66 times more volatile than Sempra. It trades about -0.25 of its total potential returns per unit of risk. Sempra is currently generating about -0.27 per unit of volatility. If you would invest  8,940  in Sempra on September 25, 2024 and sell it today you would lose (618.00) from holding Sempra or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

POSCO Holdings  vs.  Sempra

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

Sempra

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sempra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and Sempra

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

The idea behind POSCO Holdings and Sempra 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.