Correlation Between Lotte Non and Heungkuk Metaltech
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Heungkuk Metaltech 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 Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on Lotte Non and Heungkuk Metaltech 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 Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Heungkuk Metaltech.
Diversification Opportunities for Lotte Non and Heungkuk Metaltech
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and Heungkuk is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd 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 Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Lotte Non i.e., Lotte Non and Heungkuk Metaltech go up and down completely randomly.
Pair Corralation between Lotte Non and Heungkuk Metaltech
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Heungkuk Metaltech. In addition to that, Lotte Non is 2.33 times more volatile than Heungkuk Metaltech CoLtd. It trades about -0.1 of its total potential returns per unit of risk. Heungkuk Metaltech CoLtd is currently generating about -0.06 per unit of volatility. If you would invest 552,000 in Heungkuk Metaltech CoLtd on September 3, 2024 and sell it today you would lose (72,000) from holding Heungkuk Metaltech CoLtd or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Heungkuk Metaltech CoLtd
Performance |
| Timeline |
| Lotte Non Life |
| Heungkuk Metaltech CoLtd |
Lotte Non and Heungkuk Metaltech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Heungkuk Metaltech
The main advantage of trading using opposite Lotte Non and Heungkuk Metaltech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Heungkuk Metaltech 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 Heungkuk Metaltech will offset losses from the drop in Heungkuk Metaltech'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 |
| Heungkuk Metaltech vs. Daewoo Engineering Construction | Heungkuk Metaltech vs. DataSolution | Heungkuk Metaltech vs. Seohee Construction Co | Heungkuk Metaltech vs. Air Busan 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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