Correlation Between Lotte Non and Daewoo Electronic
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Daewoo Electronic 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 Daewoo Electronic 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 Daewoo Electronic Components, you can compare the effects of market volatilities on Lotte Non and Daewoo Electronic 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 Daewoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Daewoo Electronic.
Diversification Opportunities for Lotte Non and Daewoo Electronic
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Daewoo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Daewoo Electronic Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Electronic 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 Daewoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Electronic has no effect on the direction of Lotte Non i.e., Lotte Non and Daewoo Electronic go up and down completely randomly.
Pair Corralation between Lotte Non and Daewoo Electronic
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Daewoo Electronic. In addition to that, Lotte Non is 3.58 times more volatile than Daewoo Electronic Components. It trades about -0.28 of its total potential returns per unit of risk. Daewoo Electronic Components is currently generating about -0.25 per unit of volatility. If you would invest 102,600 in Daewoo Electronic Components on November 7, 2024 and sell it today you would lose (1,800) from holding Daewoo Electronic Components or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Daewoo Electronic Components
Performance |
| Timeline |
| Lotte Non Life |
| Daewoo Electronic |
Lotte Non and Daewoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Daewoo Electronic
The main advantage of trading using opposite Lotte Non and Daewoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Daewoo Electronic 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 Daewoo Electronic will offset losses from the drop in Daewoo Electronic's long position.| Lotte Non vs. CU Medical Systems | Lotte Non vs. Haitai Confectionery Foods | Lotte Non vs. Hyundai Green Food | Lotte Non vs. BIT Computer Co |
| Daewoo Electronic vs. Asiana Airlines | Daewoo Electronic vs. ENF Technology Co | Daewoo Electronic vs. Guyoung Technology Co | Daewoo Electronic vs. Hwangkum Steel Technology |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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