Correlation Between POSCO Holdings and Sands China

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

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

Diversification Opportunities for POSCO Holdings and Sands China

-0.44

Correlation Coefficient

POSCO Holdings  Sands China

Very good diversification

The 3 months correlation between POSCO and Sands is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Sands China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China 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 Sands China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands China has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Sands China go up and down completely randomly.

Pair Corralation between POSCO Holdings and Sands China

Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Sands China. In addition to that, POSCO Holdings is 1.51 times more volatile than Sands China Ltd. It trades about -0.2 of its total potential returns per unit of risk. Sands China Ltd is currently generating about 0.23 per unit of volatility. If you would invest  2,482  in Sands China Ltd on September 13, 2024 and sell it today you would earn a total of  221.00  from holding Sands China Ltd or generate 8.9% return on investment over 90 days.

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

POSCO Holdings  vs.  Sands China Ltd

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.

Sands China

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sands China Ltd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sands China showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and Sands China

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

The idea behind POSCO Holdings and Sands China Ltd 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.