Correlation Between POSCO Holdings and Azure Power
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Azure Power 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 Holdings and Azure Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Azure Power Global, you can compare the effects of market volatilities on POSCO Holdings and Azure Power 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 Holdings with a short position of Azure Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Azure Power.
Diversification Opportunities for POSCO Holdings and Azure Power
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Azure is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Azure Power Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Power Global and POSCO Holdings 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 Holdings are associated (or correlated) with Azure Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Power Global has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Azure Power go up and down completely randomly.
Pair Corralation between POSCO Holdings and Azure Power
Considering the 90-day investment horizon POSCO Holdings is expected to generate 0.31 times more return on investment than Azure Power. However, POSCO Holdings is 3.23 times less risky than Azure Power. It trades about 0.01 of its potential returns per unit of risk. Azure Power Global is currently generating about -0.13 per unit of risk. If you would invest 5,065 in POSCO Holdings on September 6, 2024 and sell it today you would lose (255.00) from holding POSCO Holdings or give up 5.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 29.09% |
Values | Daily Returns |
POSCO Holdings vs. Azure Power Global
Performance |
Timeline |
POSCO Holdings |
Azure Power Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
POSCO Holdings and Azure Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POSCO Holdings and Azure Power
The main advantage of trading using opposite POSCO Holdings and Azure Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Azure Power 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 Azure Power will offset losses from the drop in Azure Power's long position.POSCO Holdings vs. Constellium Nv | POSCO Holdings vs. Century Aluminum | POSCO Holdings vs. China Hongqiao Group | POSCO Holdings vs. Norsk Hydro ASA |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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