Correlation Between POSCO Holdings and Aryzta AG

Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Aryzta AG 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 Aryzta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between POSCO Holdings and Aryzta AG PK, you can compare the effects of market volatilities on POSCO Holdings and Aryzta AG 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 Aryzta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Aryzta AG.

Diversification Opportunities for POSCO Holdings and Aryzta AG

-0.51

Correlation Coefficient

POSCO Holdings  Aryzta AG

Excellent diversification

The 3 months correlation between POSCO and Aryzta is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK 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 Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Aryzta AG go up and down completely randomly.

Pair Corralation between POSCO Holdings and Aryzta AG

Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Aryzta AG. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.85 times less risky than Aryzta AG. The stock trades about -0.16 of its potential returns per unit of risk. The Aryzta AG PK is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Aryzta AG PK on February 28, 2024 and sell it today you would earn a total of  9.00  from holding Aryzta AG PK or generate 10.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

POSCO Holdings  vs.  Aryzta AG PK

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 latest unsteady performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aryzta AG PK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and Aryzta AG

The main advantage of trading using opposite POSCO Holdings and Aryzta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Aryzta AG 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 Aryzta AG will offset losses from the drop in Aryzta AG's long position.

The idea behind POSCO Holdings and Aryzta AG PK 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.