Correlation Between POSCO Holdings and Crown Point
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Crown Point 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 Crown Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Crown Point Energy, you can compare the effects of market volatilities on POSCO Holdings and Crown Point 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 Crown Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Crown Point.
Diversification Opportunities for POSCO Holdings and Crown Point
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and Crown is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Crown Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Point Energy 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 Crown Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Point Energy has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Crown Point go up and down completely randomly.
Pair Corralation between POSCO Holdings and Crown Point
Considering the 90-day investment horizon POSCO Holdings is expected to generate 0.76 times more return on investment than Crown Point. However, POSCO Holdings is 1.32 times less risky than Crown Point. It trades about -0.21 of its potential returns per unit of risk. Crown Point Energy is currently generating about -0.18 per unit of risk. If you would invest 6,703 in POSCO Holdings on September 12, 2024 and sell it today you would lose (2,006) from holding POSCO Holdings or give up 29.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.44% |
Values | Daily Returns |
POSCO Holdings vs. Crown Point Energy
Performance |
Timeline |
POSCO Holdings |
Crown Point Energy |
POSCO Holdings and Crown Point Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POSCO Holdings and Crown Point
The main advantage of trading using opposite POSCO Holdings and Crown Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Crown Point 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 Crown Point will offset losses from the drop in Crown Point's long position.POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Universal Stainless Alloy | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR |
Crown Point vs. POSCO Holdings | Crown Point vs. Schweizerische Nationalbank | Crown Point vs. Berkshire Hathaway | Crown Point vs. Berkshire Hathaway |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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