Correlation Between Doosan and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Doosan and Lotte Chilsung 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 Doosan and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doosan and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Doosan and Lotte Chilsung 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 Doosan with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan and Lotte Chilsung.
Diversification Opportunities for Doosan and Lotte Chilsung
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Doosan and Lotte is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Doosan and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Doosan 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 Doosan are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Doosan i.e., Doosan and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Doosan and Lotte Chilsung
Assuming the 90 days trading horizon Doosan is expected to generate 2.57 times more return on investment than Lotte Chilsung. However, Doosan is 2.57 times more volatile than Lotte Chilsung Beverage. It trades about 0.04 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.08 per unit of risk. If you would invest 21,900,000 in Doosan on September 14, 2024 and sell it today you would earn a total of 2,550,000 from holding Doosan or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Doosan |
| Lotte Chilsung Beverage |
Doosan and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan and Lotte Chilsung
The main advantage of trading using opposite Doosan and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan position performs unexpectedly, Lotte Chilsung 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 Lotte Chilsung will offset losses from the drop in Lotte Chilsung's long position.| Doosan vs. Lotte Chilsung Beverage | Doosan vs. TOPMATERIAL LTD | Doosan vs. Daewon Media Co | Doosan vs. Iljin Materials Co |
| Lotte Chilsung vs. Korea New Network | Lotte Chilsung vs. ICD Co | Lotte Chilsung vs. DYPNF CoLtd | Lotte Chilsung vs. Solution Advanced Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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