Correlation Between POSCO Holdings and AmTrust Financial

Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and AmTrust 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 AmTrust 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 AmTrust Financial Services, you can compare the effects of market volatilities on POSCO Holdings and AmTrust 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 AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and AmTrust Financial.

Diversification Opportunities for POSCO Holdings and AmTrust Financial

0.68

Correlation Coefficient

POSCO Holdings  AmTrust Financial

Poor diversification

The 3 months correlation between POSCO and AmTrust is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust 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 AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and AmTrust Financial go up and down completely randomly.

Pair Corralation between POSCO Holdings and AmTrust Financial

Considering the 90-day investment horizon POSCO Holdings is expected to generate 1.17 times more return on investment than AmTrust Financial. However, POSCO Holdings is 1.17 times more volatile than AmTrust Financial Services. It trades about 0.08 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.08 per unit of risk. If you would invest  4,330  in POSCO Holdings on December 28, 2024 and sell it today you would earn a total of  542.00  from holding POSCO Holdings or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

POSCO Holdings  vs.  AmTrust Financial Services

POSCO Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSCO Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward-looking signals, POSCO Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

AmTrust Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, AmTrust Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with POSCO Holdings and AmTrust Financial

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

The idea behind POSCO Holdings and AmTrust Financial Services 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.