Correlation Between POSCO Holdings and Mesa Royalty

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

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

Diversification Opportunities for POSCO Holdings and Mesa Royalty

0.34

Correlation Coefficient

POSCO Holdings  Mesa Royalty

Weak diversification

The 3 months correlation between POSCO and Mesa is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Mesa Royalty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Royalty Trust 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 Mesa Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Royalty Trust has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Mesa Royalty go up and down completely randomly.

Pair Corralation between POSCO Holdings and Mesa Royalty

Considering the 90-day investment horizon POSCO Holdings is expected to generate 2.15 times less return on investment than Mesa Royalty. But when comparing it to its historical volatility, POSCO Holdings is 3.03 times less risky than Mesa Royalty. It trades about 0.09 of its potential returns per unit of risk. Mesa Royalty Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  509.00  in Mesa Royalty Trust on May 7, 2025 and sell it today you would earn a total of  75.00  from holding Mesa Royalty Trust or generate 14.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

POSCO Holdings  vs.  Mesa Royalty Trust

POSCO Holdings

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in POSCO Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking signals, POSCO Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Mesa Royalty Trust

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Royalty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Mesa Royalty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSCO Holdings and Mesa Royalty

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

The idea behind POSCO Holdings and Mesa Royalty Trust 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.