Correlation Between Lotte Non and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on Lotte Non and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Industrial Bank.
Diversification Opportunities for Lotte Non and Industrial Bank
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and Industrial is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Lotte Non i.e., Lotte Non and Industrial Bank go up and down completely randomly.
Pair Corralation between Lotte Non and Industrial Bank
Assuming the 90 days trading horizon Lotte Non is expected to generate 1.01 times less return on investment than Industrial Bank. In addition to that, Lotte Non is 2.98 times more volatile than Industrial Bank. It trades about 0.03 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.09 per unit of volatility. If you would invest 936,269 in Industrial Bank on October 28, 2024 and sell it today you would earn a total of 570,731 from holding Industrial Bank or generate 60.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Industrial Bank
Performance |
| Timeline |
| Lotte Non Life |
| Industrial Bank |
Lotte Non and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Industrial Bank
The main advantage of trading using opposite Lotte Non and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| Lotte Non vs. KB Financial Group | Lotte Non vs. Shinhan Financial Group | Lotte Non vs. Hana Financial | Lotte Non vs. Woori Financial Group |
| Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. SK Hynix | Industrial Bank vs. HMM 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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