Correlation Between Lotte Non and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Seoul Food 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 Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Non Life Insurance and Seoul Food Industrial, you can compare the effects of market volatilities on Lotte Non and Seoul Food 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 Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Seoul Food.
Diversification Opportunities for Lotte Non and Seoul Food
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Seoul is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial 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 Insurance are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Lotte Non i.e., Lotte Non and Seoul Food go up and down completely randomly.
Pair Corralation between Lotte Non and Seoul Food
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Seoul Food. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 2.2 times less risky than Seoul Food. The stock trades about -0.08 of its potential returns per unit of risk. The Seoul Food Industrial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 14,300 in Seoul Food Industrial on January 19, 2025 and sell it today you would earn a total of 2,300 from holding Seoul Food Industrial or generate 16.08% 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 Insurance vs. Seoul Food Industrial
Performance |
| Timeline |
| Lotte Non Life |
| Seoul Food Industrial |
Lotte Non and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Seoul Food
The main advantage of trading using opposite Lotte Non and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Lotte Non vs. Air Busan Co | Lotte Non vs. Daejung Chemicals Metals | Lotte Non vs. Jeju Air Co | Lotte Non vs. Namkwang Engineering Construction |
| Seoul Food vs. AptaBio Therapeutics | Seoul Food vs. Daewoo SBI SPAC | Seoul Food vs. Dream Security co | Seoul Food vs. Microfriend |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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