Correlation Between POSCO Holdings and Computer Modelling

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

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

Diversification Opportunities for POSCO Holdings and Computer Modelling

0.7

Correlation Coefficient

POSCO Holdings  Computer Modelling

Poor diversification

The 3 months correlation between POSCO and Computer is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Computer Modelling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Modelling 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 Computer Modelling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Modelling has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Computer Modelling go up and down completely randomly.

Pair Corralation between POSCO Holdings and Computer Modelling

Considering the 90-day investment horizon POSCO Holdings is expected to generate 36.17 times less return on investment than Computer Modelling. But when comparing it to its historical volatility, POSCO Holdings is 1.25 times less risky than Computer Modelling. It trades about 0.0 of its potential returns per unit of risk. Computer Modelling Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  411.00  in Computer Modelling Group on September 20, 2024 and sell it today you would earn a total of  334.00  from holding Computer Modelling Group or generate 81.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.2%
Values	Daily Returns

POSCO Holdings  vs.  Computer Modelling Group

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 unfluctuating 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.

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Pair Trading with POSCO Holdings and Computer Modelling

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

The idea behind POSCO Holdings and Computer Modelling Group 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.