Correlation Between Lotte Non-Life and KG Eco
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and KG Eco 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 KG Eco 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 KG Eco Technology, you can compare the effects of market volatilities on Lotte Non-Life and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and KG Eco.
Diversification Opportunities for Lotte Non-Life and KG Eco
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and 151860 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and KG Eco go up and down completely randomly.
Pair Corralation between Lotte Non-Life and KG Eco
Assuming the 90 days trading horizon Lotte Non Life is expected to under-perform the KG Eco. In addition to that, Lotte Non-Life is 1.28 times more volatile than KG Eco Technology. It trades about -0.14 of its total potential returns per unit of risk. KG Eco Technology is currently generating about 0.39 per unit of volatility. If you would invest 496,000 in KG Eco Technology on November 27, 2024 and sell it today you would earn a total of 55,000 from holding KG Eco Technology or generate 11.09% 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. KG Eco Technology
Performance |
| Timeline |
| Lotte Non Life |
| KG Eco Technology |
Lotte Non-Life and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and KG Eco
The main advantage of trading using opposite Lotte Non-Life and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco'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 |
| KG Eco vs. Young Heung Iron | KG Eco vs. Daehan Steel | KG Eco vs. Daewoo Engineering Construction | KG Eco vs. Fine Besteel 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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