Correlation Between Lotte Non-Life and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Korea Electric 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 Lotte Non-Life and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Non Life and Korea Electric Power, you can compare the effects of market volatilities on Lotte Non-Life and Korea Electric 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 Lotte Non-Life with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Korea Electric.
Diversification Opportunities for Lotte Non-Life and Korea Electric
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Korea is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power and Lotte Non-Life 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 Lotte Non Life are associated (or correlated) with Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Korea Electric go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Korea Electric
Assuming the 90 days trading horizon Lotte Non Life is expected to generate 1.93 times more return on investment than Korea Electric. However, Lotte Non-Life is 1.93 times more volatile than Korea Electric Power. It trades about 0.03 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.03 per unit of risk. If you would invest 152,200 in Lotte Non Life on November 27, 2024 and sell it today you would earn a total of 33,700 from holding Lotte Non Life or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life vs. Korea Electric Power
Performance |
| Timeline |
| Lotte Non Life |
| Korea Electric Power |
Lotte Non-Life and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and Korea Electric
The main advantage of trading using opposite Lotte Non-Life and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Korea Electric 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 Korea Electric will offset losses from the drop in Korea Electric's long position.| Lotte Non-Life vs. DC Media Co | Lotte Non-Life vs. Nasmedia Co | Lotte Non-Life vs. ChipsMedia | Lotte Non-Life vs. JYP Entertainment Corp |
| Korea Electric vs. Lotte Non Life Insurance | Korea Electric vs. Seoyon Topmetal Co | Korea Electric vs. Samick Musical Instruments | Korea Electric vs. DB Insurance Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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