Correlation Between POSCO Holdings and Heartland Banccorp

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

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

Diversification Opportunities for POSCO Holdings and Heartland Banccorp

0.46

Correlation Coefficient

POSCO Holdings  Heartland Banccorp

Very weak diversification

The 3 months correlation between POSCO and Heartland is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp 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 Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Heartland Banccorp go up and down completely randomly.

Pair Corralation between POSCO Holdings and Heartland Banccorp

Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Heartland Banccorp. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.33 times less risky than Heartland Banccorp. The stock trades about 0.0 of its potential returns per unit of risk. The Heartland Banccorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,799  in Heartland Banccorp on December 2, 2024 and sell it today you would earn a total of  7,201  from holding Heartland Banccorp or generate 81.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.83%
Values	Daily Returns

POSCO Holdings  vs.  Heartland Banccorp

POSCO Holdings

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Heartland Banccorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heartland Banccorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Heartland Banccorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with POSCO Holdings and Heartland Banccorp

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

The idea behind POSCO Holdings and Heartland Banccorp 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.