Correlation Between Lotte Non and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Gyeongnam 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 and Gyeongnam 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 Gyeongnam Steel Co, you can compare the effects of market volatilities on Lotte Non and Gyeongnam 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 with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Gyeongnam Steel.
Diversification Opportunities for Lotte Non and Gyeongnam Steel
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Gyeongnam is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel 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 Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of Lotte Non i.e., Lotte Non and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Lotte Non and Gyeongnam Steel
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Gyeongnam Steel. In addition to that, Lotte Non is 1.47 times more volatile than Gyeongnam Steel Co. It trades about -0.18 of its total potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.02 per unit of volatility. If you would invest 281,000 in Gyeongnam Steel Co on September 4, 2024 and sell it today you would earn a total of 1,500 from holding Gyeongnam Steel Co or generate 0.53% 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. Gyeongnam Steel Co
Performance |
| Timeline |
| Lotte Non Life |
| Gyeongnam Steel |
Lotte Non and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Gyeongnam Steel
The main advantage of trading using opposite Lotte Non and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Gyeongnam 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.| Lotte Non vs. AptaBio Therapeutics | Lotte Non vs. Daewoo SBI SPAC | Lotte Non vs. Dream Security co | Lotte Non vs. Microfriend |
| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. Tplex Co | Gyeongnam Steel vs. Daedong Steel Co | Gyeongnam Steel vs. Wonil Special Steel |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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