Correlation Between Lotte Non and MEDIANA CoLtd
Can any of the company-specific risk be diversified away by investing in both Lotte Non and MEDIANA CoLtd 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 MEDIANA CoLtd 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 MEDIANA CoLtd, you can compare the effects of market volatilities on Lotte Non and MEDIANA CoLtd 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 MEDIANA CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and MEDIANA CoLtd.
Diversification Opportunities for Lotte Non and MEDIANA CoLtd
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and MEDIANA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and MEDIANA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIANA CoLtd 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 MEDIANA CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIANA CoLtd has no effect on the direction of Lotte Non i.e., Lotte Non and MEDIANA CoLtd go up and down completely randomly.
Pair Corralation between Lotte Non and MEDIANA CoLtd
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.82 times more return on investment than MEDIANA CoLtd. However, Lotte Non Life Insurance is 1.22 times less risky than MEDIANA CoLtd. It trades about -0.1 of its potential returns per unit of risk. MEDIANA CoLtd is currently generating about -0.11 per unit of risk. If you would invest 201,500 in Lotte Non Life Insurance on November 3, 2024 and sell it today you would lose (5,400) from holding Lotte Non Life Insurance or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. MEDIANA CoLtd
Performance |
| Timeline |
| Lotte Non Life |
| MEDIANA CoLtd |
Lotte Non and MEDIANA CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and MEDIANA CoLtd
The main advantage of trading using opposite Lotte Non and MEDIANA CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, MEDIANA CoLtd 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 MEDIANA CoLtd will offset losses from the drop in MEDIANA CoLtd's long position.| Lotte Non vs. LG Household Healthcare | Lotte Non vs. Solution Advanced Technology | Lotte Non vs. Lion Chemtech Co | Lotte Non vs. LG Household Healthcare |
| MEDIANA CoLtd vs. KPX Green Chemical | MEDIANA CoLtd vs. Tway Air Co | MEDIANA CoLtd vs. Air Busan Co | MEDIANA CoLtd vs. Kg Chemical |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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