Correlation Between POSCO Holdings and Peyto ExplorationDevel

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

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

Diversification Opportunities for POSCO Holdings and Peyto ExplorationDevel

0.35

Correlation Coefficient

POSCO Holdings  Peyto ExplorationDevel

Weak diversification

The 3 months correlation between POSCO and Peyto is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel 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 Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between POSCO Holdings and Peyto ExplorationDevel

Considering the 90-day investment horizon POSCO Holdings is expected to generate 1.5 times more return on investment than Peyto ExplorationDevel. However, POSCO Holdings is 1.5 times more volatile than Peyto ExplorationDevelopment Corp. It trades about 0.12 of its potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.12 per unit of risk. If you would invest  4,337  in POSCO Holdings on December 27, 2024 and sell it today you would earn a total of  791.00  from holding POSCO Holdings or generate 18.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

POSCO Holdings  vs.  Peyto ExplorationDevelopment C

POSCO Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSCO Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, POSCO Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Peyto ExplorationDevel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peyto ExplorationDevelopment Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peyto ExplorationDevel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and Peyto ExplorationDevel

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

The idea behind POSCO Holdings and Peyto ExplorationDevelopment Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.