Correlation Between POSCO Holdings and Eco Oil
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Eco Oil 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 Eco Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Eco Oil Gas, you can compare the effects of market volatilities on POSCO Holdings and Eco Oil 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 Eco Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Eco Oil.
Diversification Opportunities for POSCO Holdings and Eco Oil
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between POSCO and Eco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Oil Gas 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 Eco Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Oil Gas has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Eco Oil go up and down completely randomly.
Pair Corralation between POSCO Holdings and Eco Oil
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Eco Oil. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 3.15 times less risky than Eco Oil. The stock trades about -0.26 of its potential returns per unit of risk. The Eco Oil Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Eco Oil Gas on September 19, 2024 and sell it today you would earn a total of 2.00 from holding Eco Oil Gas or generate 15.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.62% |
Values | Daily Returns |
POSCO Holdings vs. Eco Oil Gas
Performance |
Timeline |
POSCO Holdings |
Eco Oil Gas |
POSCO Holdings and Eco Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POSCO Holdings and Eco Oil
The main advantage of trading using opposite POSCO Holdings and Eco Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Eco Oil 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 Eco Oil will offset losses from the drop in Eco Oil's long position.The idea behind POSCO Holdings and Eco Oil Gas 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.Eco Oil vs. POSCO Holdings | Eco Oil vs. Schweizerische Nationalbank | Eco Oil vs. Berkshire Hathaway | Eco Oil vs. Berkshire Hathaway |
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 CEOs Directory module to screen CEOs from public companies around the world.
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