Correlation Between POSCO Holdings and Commercial National

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

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

Diversification Opportunities for POSCO Holdings and Commercial National

-0.8

Correlation Coefficient

POSCO Holdings  Commercial National

Pay attention - limited upside

The 3 months correlation between POSCO and Commercial is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Commercial National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial National 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 Commercial National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial National has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Commercial National go up and down completely randomly.

Pair Corralation between POSCO Holdings and Commercial National

Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Commercial National. In addition to that, POSCO Holdings is 1.28 times more volatile than Commercial National Financial. It trades about -0.1 of its total potential returns per unit of risk. Commercial National Financial is currently generating about 0.07 per unit of volatility. If you would invest  774.00  in Commercial National Financial on September 4, 2024 and sell it today you would earn a total of  201.00  from holding Commercial National Financial or generate 25.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	87.04%
Values	Daily Returns

POSCO Holdings  vs.  Commercial National Financial

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. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Commercial National

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Commercial National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with POSCO Holdings and Commercial National

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

The idea behind POSCO Holdings and Commercial National Financial 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.