Correlation Between Samhwa Paint and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Samhwa Paint and Lotte Data 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 Samhwa Paint and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhwa Paint Industrial and Lotte Data Communication, you can compare the effects of market volatilities on Samhwa Paint and Lotte Data 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 Samhwa Paint with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhwa Paint and Lotte Data.
Diversification Opportunities for Samhwa Paint and Lotte Data
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samhwa and Lotte is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samhwa Paint Industrial and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Samhwa Paint 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 Samhwa Paint Industrial are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Samhwa Paint i.e., Samhwa Paint and Lotte Data go up and down completely randomly.
Pair Corralation between Samhwa Paint and Lotte Data
Assuming the 90 days trading horizon Samhwa Paint Industrial is expected to generate 1.25 times more return on investment than Lotte Data. However, Samhwa Paint is 1.25 times more volatile than Lotte Data Communication. It trades about -0.02 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.09 per unit of risk. If you would invest 770,000 in Samhwa Paint Industrial on September 3, 2024 and sell it today you would lose (121,000) from holding Samhwa Paint Industrial or give up 15.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhwa Paint Industrial vs. Lotte Data Communication
Performance |
| Timeline |
| Samhwa Paint Industrial |
| Lotte Data Communication |
Samhwa Paint and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samhwa Paint and Lotte Data
The main advantage of trading using opposite Samhwa Paint and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhwa Paint position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Samhwa Paint vs. Seoam Machinery Industry | Samhwa Paint vs. GS Engineering Construction | Samhwa Paint vs. Daejung Chemicals Metals | Samhwa Paint vs. Hanshin Construction Co |
| Lotte Data vs. Seoul Food Industrial | Lotte Data vs. Hannong Chemicals | Lotte Data vs. Sung Bo Chemicals | Lotte Data vs. Samhwa Paint Industrial |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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