Correlation Between Lotte Non and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Korea Petro 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 Korea Petro 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 Korea Petro Chemical, you can compare the effects of market volatilities on Lotte Non and Korea Petro 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 Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Korea Petro.
Diversification Opportunities for Lotte Non and Korea Petro
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Korea is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical 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 Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Lotte Non i.e., Lotte Non and Korea Petro go up and down completely randomly.
Pair Corralation between Lotte Non and Korea Petro
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.85 times more return on investment than Korea Petro. However, Lotte Non Life Insurance is 1.17 times less risky than Korea Petro. It trades about -0.13 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.25 per unit of risk. If you would invest 234,500 in Lotte Non Life Insurance on September 3, 2024 and sell it today you would lose (31,000) from holding Lotte Non Life Insurance or give up 13.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Korea Petro Chemical
Performance |
| Timeline |
| Lotte Non Life |
| Korea Petro Chemical |
Lotte Non and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Korea Petro
The main advantage of trading using opposite Lotte Non and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Lotte Non vs. Seoyon Topmetal Co | Lotte Non vs. Coloray International Investment | Lotte Non vs. Daejung Chemicals Metals | Lotte Non vs. Daol Investment Securities |
| Korea Petro vs. Lotte Non Life Insurance | Korea Petro vs. Dong A Steel Technology | Korea Petro vs. Samsung Life Insurance | Korea Petro vs. Jb Financial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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