Correlation Between Holloman Energy and POSCO Holdings

Can any of the company-specific risk be diversified away by investing in both Holloman 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 Holloman 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 Holloman Energy Corp and POSCO Holdings, you can compare the effects of market volatilities on Holloman 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 Holloman Energy with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holloman Energy and POSCO Holdings.

Diversification Opportunities for Holloman Energy and POSCO Holdings

0.0

Correlation Coefficient

Holloman Energy  POSCO Holdings

Pay attention - limited upside

The 3 months correlation between Holloman and POSCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Holloman Energy Corp and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Holloman 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 Holloman Energy Corp 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 Holloman Energy i.e., Holloman Energy and POSCO Holdings go up and down completely randomly.

Pair Corralation between Holloman Energy and POSCO Holdings

Given the investment horizon of 90 days Holloman Energy Corp is expected to under-perform the POSCO Holdings. In addition to that, Holloman Energy is 5.16 times more volatile than POSCO Holdings. It trades about -0.13 of its total potential returns per unit of risk. POSCO Holdings is currently generating about -0.24 per unit of volatility. If you would invest  6,962  in POSCO Holdings on September 14, 2024 and sell it today you would lose (2,292) from holding POSCO Holdings or give up 32.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Holloman Energy Corp  vs.  POSCO Holdings

Holloman Energy Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Holloman Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Holloman Energy and POSCO Holdings

The main advantage of trading using opposite Holloman Energy and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holloman 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 Holloman Energy Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.