Correlation Between Lotte Non and Pungguk Ethanol
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Pungguk Ethanol 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 Pungguk Ethanol 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 Pungguk Ethanol Industrial, you can compare the effects of market volatilities on Lotte Non and Pungguk Ethanol 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 Pungguk Ethanol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Pungguk Ethanol.
Diversification Opportunities for Lotte Non and Pungguk Ethanol
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Pungguk is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu 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 Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Lotte Non i.e., Lotte Non and Pungguk Ethanol go up and down completely randomly.
Pair Corralation between Lotte Non and Pungguk Ethanol
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.68 times more return on investment than Pungguk Ethanol. However, Lotte Non is 1.68 times more volatile than Pungguk Ethanol Industrial. It trades about 0.03 of its potential returns per unit of risk. Pungguk Ethanol Industrial is currently generating about -0.03 per unit of risk. If you would invest 151,000 in Lotte Non Life Insurance on September 4, 2024 and sell it today you would earn a total of 54,000 from holding Lotte Non Life Insurance or generate 35.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Pungguk Ethanol Industrial
Performance |
| Timeline |
| Lotte Non Life |
| Pungguk Ethanol Indu |
Lotte Non and Pungguk Ethanol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Pungguk Ethanol
The main advantage of trading using opposite Lotte Non and Pungguk Ethanol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Pungguk Ethanol 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 Pungguk Ethanol will offset losses from the drop in Pungguk Ethanol's long position.| Lotte Non vs. AptaBio Therapeutics | Lotte Non vs. Daewoo SBI SPAC | Lotte Non vs. Dream Security co | Lotte Non vs. Microfriend |
| Pungguk Ethanol vs. Tae Kyung Chemical | Pungguk Ethanol vs. Kukdong Oil Chemicals | Pungguk Ethanol vs. Miwon Chemical | Pungguk Ethanol vs. Daehan Synthetic Fiber |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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