Correlation Between Lotte Non and SBI Investment
Can any of the company-specific risk be diversified away by investing in both Lotte Non and SBI Investment 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 and SBI Investment 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 SBI Investment KOREA, you can compare the effects of market volatilities on Lotte Non and SBI Investment 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 with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and SBI Investment.
Diversification Opportunities for Lotte Non and SBI Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and SBI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and Lotte Non 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 SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Lotte Non i.e., Lotte Non and SBI Investment go up and down completely randomly.
Pair Corralation between Lotte Non and SBI Investment
Assuming the 90 days trading horizon Lotte Non Life is expected to under-perform the SBI Investment. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life is 1.05 times less risky than SBI Investment. The stock trades about -0.2 of its potential returns per unit of risk. The SBI Investment KOREA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 72,700 in SBI Investment KOREA on August 25, 2024 and sell it today you would lose (2,300) from holding SBI Investment KOREA or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life vs. SBI Investment KOREA
Performance |
| Timeline |
| Lotte Non Life |
| SBI Investment KOREA |
Lotte Non and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and SBI Investment
The main advantage of trading using opposite Lotte Non and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| Lotte Non vs. SBI Investment KOREA | Lotte Non vs. EBEST Investment Securities | Lotte Non vs. Jeju Air Co | Lotte Non vs. Daewoo Engineering Construction |
| SBI Investment vs. Korea New Network | SBI Investment vs. Dong A Eltek | SBI Investment vs. Dreamus Company | SBI Investment vs. SK Bioscience 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |