Correlation Between POSCO Thainox and Millcon Steel
Can any of the company-specific risk be diversified away by investing in both POSCO Thainox and Millcon Steel 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 Thainox and Millcon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Thainox Public and Millcon Steel Public, you can compare the effects of market volatilities on POSCO Thainox and Millcon Steel 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 Thainox with a short position of Millcon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Thainox and Millcon Steel.
Diversification Opportunities for POSCO Thainox and Millcon Steel
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Millcon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Thainox Public and Millcon Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millcon Steel Public and POSCO Thainox 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 Thainox Public are associated (or correlated) with Millcon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millcon Steel Public has no effect on the direction of POSCO Thainox i.e., POSCO Thainox and Millcon Steel go up and down completely randomly.
Pair Corralation between POSCO Thainox and Millcon Steel
Assuming the 90 days trading horizon POSCO Thainox Public is expected to generate 0.34 times more return on investment than Millcon Steel. However, POSCO Thainox Public is 2.9 times less risky than Millcon Steel. It trades about -0.04 of its potential returns per unit of risk. Millcon Steel Public is currently generating about -0.03 per unit of risk. If you would invest 53.00 in POSCO Thainox Public on September 14, 2024 and sell it today you would lose (4.00) from holding POSCO Thainox Public or give up 7.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
POSCO Thainox Public vs. Millcon Steel Public
Performance |
Timeline |
POSCO Thainox Public |
Millcon Steel Public |
POSCO Thainox and Millcon Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POSCO Thainox and Millcon Steel
The main advantage of trading using opposite POSCO Thainox and Millcon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Thainox position performs unexpectedly, Millcon Steel 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 Millcon Steel will offset losses from the drop in Millcon Steel's long position.POSCO Thainox vs. Internet Thailand Public | POSCO Thainox vs. Millcon Steel Public | POSCO Thainox vs. G J Steel | POSCO Thainox vs. Italian Thai Development Public |
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Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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