Correlation Between Orca Energy and POSCO Holdings

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

Diversification Opportunities for Orca Energy and POSCO Holdings

0.63

Correlation Coefficient

Orca Energy  POSCO Holdings

Poor diversification

The 3 months correlation between Orca and POSCO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Orca Energy Group and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Orca 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 Orca Energy Group 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 Orca Energy i.e., Orca Energy and POSCO Holdings go up and down completely randomly.

Pair Corralation between Orca Energy and POSCO Holdings

Assuming the 90 days horizon Orca Energy Group is expected to under-perform the POSCO Holdings. In addition to that, Orca Energy is 1.34 times more volatile than POSCO Holdings. It trades about -0.06 of its total potential returns per unit of risk. POSCO Holdings is currently generating about -0.07 per unit of volatility. If you would invest  10,321  in POSCO Holdings on September 13, 2024 and sell it today you would lose (5,553) from holding POSCO Holdings or give up 53.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	59.94%
Values	Daily Returns

Orca Energy Group  vs.  POSCO Holdings

Orca Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orca Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Orca Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Orca Energy and POSCO Holdings

The main advantage of trading using opposite Orca Energy and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orca 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 Orca Energy Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.