Correlation Between Supernova Energy and POSCO Holdings

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

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

Diversification Opportunities for Supernova Energy and POSCO Holdings

0.17

Correlation Coefficient

Supernova Energy  POSCO Holdings

Average diversification

The 3 months correlation between Supernova and POSCO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Supernova Energy and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Supernova Energy 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 Supernova Energy are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Supernova Energy i.e., Supernova Energy and POSCO Holdings go up and down completely randomly.

Pair Corralation between Supernova Energy and POSCO Holdings

If you would invest  4,154  in POSCO Holdings on December 5, 2024 and sell it today you would earn a total of  420.00  from holding POSCO Holdings or generate 10.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Supernova Energy  vs.  POSCO Holdings

Supernova Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Supernova Energy 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 fairly strong forward-looking signals, POSCO Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Supernova Energy and POSCO Holdings

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

The idea behind Supernova Energy and POSCO Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.