Correlation Between Lotte Non-Life and Jeil Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Jeil Steel 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 Jeil Steel 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 Jeil Steel Mfg, you can compare the effects of market volatilities on Lotte Non-Life and Jeil Steel 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 Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Jeil Steel.
Diversification Opportunities for Lotte Non-Life and Jeil Steel
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lotte and Jeil is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg 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 Insurance are associated (or correlated) with Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Jeil Steel go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Jeil Steel
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Jeil Steel. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 1.75 times less risky than Jeil Steel. The stock trades about -0.15 of its potential returns per unit of risk. The Jeil Steel Mfg is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 204,000 in Jeil Steel Mfg on September 12, 2024 and sell it today you would lose (26,200) from holding Jeil Steel Mfg or give up 12.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Jeil Steel Mfg
Performance |
| Timeline |
| Lotte Non Life |
| Jeil Steel Mfg |
Lotte Non-Life and Jeil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and Jeil Steel
The main advantage of trading using opposite Lotte Non-Life and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Jeil Steel 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.| Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. SK Hynix | Lotte Non-Life vs. POSCO Holdings |
| Jeil Steel vs. SEOJEON ELECTRIC MACHINERY | Jeil Steel vs. DB Insurance Co | Jeil Steel vs. Settlebank | Jeil Steel vs. Seoam Machinery Industry |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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