Correlation Between POSCO Holdings and BAB
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and BAB 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 BAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and BAB Inc, you can compare the effects of market volatilities on POSCO Holdings and BAB 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 BAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and BAB.
Diversification Opportunities for POSCO Holdings and BAB
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and BAB is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and BAB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAB Inc 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 BAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAB Inc has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and BAB go up and down completely randomly.
Pair Corralation between POSCO Holdings and BAB
Considering the 90-day investment horizon POSCO Holdings is expected to generate 0.85 times more return on investment than BAB. However, POSCO Holdings is 1.18 times less risky than BAB. It trades about -0.02 of its potential returns per unit of risk. BAB Inc is currently generating about -0.07 per unit of risk. If you would invest 7,368 in POSCO Holdings on February 11, 2024 and sell it today you would lose (82.00) from holding POSCO Holdings or give up 1.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
POSCO Holdings vs. BAB Inc
Performance |
Timeline |
POSCO Holdings |
BAB Inc |
POSCO Holdings and BAB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with POSCO Holdings and BAB
The main advantage of trading using opposite POSCO Holdings and BAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, BAB 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 BAB will offset losses from the drop in BAB's long position.POSCO Holdings vs. Via Renewables | POSCO Holdings vs. Oshidori International Holdings | POSCO Holdings vs. US70082LAB36 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |