Correlation Between Lotte Non and LG Uplus
Can any of the company-specific risk be diversified away by investing in both Lotte Non and LG Uplus 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 LG Uplus 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 LG Uplus, you can compare the effects of market volatilities on Lotte Non and LG Uplus 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 LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and LG Uplus.
Diversification Opportunities for Lotte Non and LG Uplus
Excellent diversification
The 3 months correlation between Lotte and 032640 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus 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 LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Lotte Non i.e., Lotte Non and LG Uplus go up and down completely randomly.
Pair Corralation between Lotte Non and LG Uplus
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 3.61 times more return on investment than LG Uplus. However, Lotte Non is 3.61 times more volatile than LG Uplus. It trades about 0.03 of its potential returns per unit of risk. LG Uplus is currently generating about 0.01 per unit of risk. If you would invest 153,000 in Lotte Non Life Insurance on October 10, 2024 and sell it today you would earn a total of 53,000 from holding Lotte Non Life Insurance or generate 34.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. LG Uplus
Performance |
| Timeline |
| Lotte Non Life |
| LG Uplus |
Lotte Non and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and LG Uplus
The main advantage of trading using opposite Lotte Non and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, LG Uplus 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 LG Uplus will offset losses from the drop in LG Uplus' long position.| Lotte Non vs. Nice Information Telecommunication | Lotte Non vs. Playgram Co | Lotte Non vs. Iljin Display | Lotte Non vs. Shinil Industrial Co |
| LG Uplus vs. Aprogen Healthcare Games | LG Uplus vs. Seoul Semiconductor Co | LG Uplus vs. Hyundai Engineering Plastics | LG Uplus vs. PI Advanced Materials |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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