Correlation Between Alchera and Posco ICT

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

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

Diversification Opportunities for Alchera and Posco ICT

0.85

Correlation Coefficient

Alchera  Posco ICT

Very poor diversification

The 3 months correlation between Alchera and Posco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alchera and Posco ICT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco ICT and Alchera 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 Alchera are associated (or correlated) with Posco ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco ICT has no effect on the direction of Alchera i.e., Alchera and Posco ICT go up and down completely randomly.

Pair Corralation between Alchera and Posco ICT

Assuming the 90 days trading horizon Alchera is expected to generate 1.09 times more return on investment than Posco ICT. However, Alchera is 1.09 times more volatile than Posco ICT. It trades about -0.07 of its potential returns per unit of risk. Posco ICT is currently generating about -0.13 per unit of risk. If you would invest  255,500  in Alchera on September 5, 2024 and sell it today you would lose (44,500) from holding Alchera or give up 17.42% of portfolio value over 90 days.

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

Alchera  vs.  Posco ICT

Alchera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alchera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Posco ICT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Posco ICT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Pair Trading with Alchera and Posco ICT

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

The idea behind Alchera and Posco ICT 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.