Correlation Between Lotte Non and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Samsung Life 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 Samsung Life 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 Samsung Life, you can compare the effects of market volatilities on Lotte Non and Samsung Life 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 Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Samsung Life.
Diversification Opportunities for Lotte Non and Samsung Life
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Samsung is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Lotte Non i.e., Lotte Non and Samsung Life go up and down completely randomly.
Pair Corralation between Lotte Non and Samsung Life
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.69 times more return on investment than Samsung Life. However, Lotte Non is 1.69 times more volatile than Samsung Life. It trades about 0.03 of its potential returns per unit of risk. Samsung Life is currently generating about 0.05 per unit of risk. If you would invest 150,000 in Lotte Non Life Insurance on August 28, 2024 and sell it today you would earn a total of 54,500 from holding Lotte Non Life Insurance or generate 36.33% 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. Samsung Life
Performance |
| Timeline |
| Lotte Non Life |
| Samsung Life |
Lotte Non and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Samsung Life
The main advantage of trading using opposite Lotte Non and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life's long position.| Lotte Non vs. DONGKUK STEEL MILL | Lotte Non vs. J Steel Co | Lotte Non vs. Dongbu Steel Co | Lotte Non vs. GS Retail Co |
| Samsung Life vs. Korea New Network | Samsung Life vs. Dong A Eltek | Samsung Life vs. Dreamus Company | Samsung Life vs. SK Bioscience 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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