Correlation Between Lotte Non-Life and Dreamus
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Dreamus 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 Dreamus 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 Dreamus Company, you can compare the effects of market volatilities on Lotte Non-Life and Dreamus 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 Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Dreamus.
Diversification Opportunities for Lotte Non-Life and Dreamus
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Dreamus is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company 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 Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Dreamus go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Dreamus
Assuming the 90 days trading horizon Lotte Non Life is expected to generate 1.05 times more return on investment than Dreamus. However, Lotte Non-Life is 1.05 times more volatile than Dreamus Company. It trades about 0.03 of its potential returns per unit of risk. Dreamus Company is currently generating about -0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life vs. Dreamus Company
Performance |
| Timeline |
| Lotte Non Life |
| Dreamus Company |
Lotte Non-Life and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and Dreamus
The main advantage of trading using opposite Lotte Non-Life and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' 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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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