Correlation Between Lotte Non and Shinsegae Engineering
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Shinsegae Engineering 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 Shinsegae Engineering 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 Shinsegae Engineering Construction, you can compare the effects of market volatilities on Lotte Non and Shinsegae Engineering 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 Shinsegae Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Shinsegae Engineering.
Diversification Opportunities for Lotte Non and Shinsegae Engineering
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lotte and Shinsegae is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering 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 Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of Lotte Non i.e., Lotte Non and Shinsegae Engineering go up and down completely randomly.
Pair Corralation between Lotte Non and Shinsegae Engineering
Assuming the 90 days trading horizon Lotte Non Life is expected to generate 1.28 times more return on investment than Shinsegae Engineering. However, Lotte Non is 1.28 times more volatile than Shinsegae Engineering Construction. It trades about 0.04 of its potential returns per unit of risk. Shinsegae Engineering Construction is currently generating about 0.02 per unit of risk. If you would invest 150,500 in Lotte Non Life on September 3, 2024 and sell it today you would earn a total of 54,500 from holding Lotte Non Life or generate 36.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life vs. Shinsegae Engineering Construc
Performance |
| Timeline |
| Lotte Non Life |
| Shinsegae Engineering |
Lotte Non and Shinsegae Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Shinsegae Engineering
The main advantage of trading using opposite Lotte Non and Shinsegae Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Shinsegae Engineering 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 Shinsegae Engineering will offset losses from the drop in Shinsegae Engineering's long position.| Lotte Non vs. Dongjin Semichem Co | Lotte Non vs. AhnLab Inc | Lotte Non vs. Posco ICT | Lotte Non vs. CJ ENM |
| Shinsegae Engineering vs. Korea Investment Holdings | Shinsegae Engineering vs. Stic Investments | Shinsegae Engineering vs. Gyeongnam Steel Co | Shinsegae Engineering vs. Hanil Iron Steel |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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