Correlation Between Lotte Non and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech Co, you can compare the effects of market volatilities on Lotte Non and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Sungchang Autotech.
Diversification Opportunities for Lotte Non and Sungchang Autotech
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Sungchang is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Lotte Non i.e., Lotte Non and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Lotte Non and Sungchang Autotech
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.85 times more return on investment than Sungchang Autotech. However, Lotte Non is 1.85 times more volatile than Sungchang Autotech Co. It trades about 0.03 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.06 per unit of risk. If you would invest 154,800 in Lotte Non Life Insurance on October 16, 2024 and sell it today you would earn a total of 49,200 from holding Lotte Non Life Insurance or generate 31.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Sungchang Autotech Co
Performance |
| Timeline |
| Lotte Non Life |
| Sungchang Autotech |
Lotte Non and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Sungchang Autotech
The main advantage of trading using opposite Lotte Non and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Lotte Non vs. Hyundai Green Food | Lotte Non vs. Sajo Seafood | Lotte Non vs. Seoul Electronics Telecom | Lotte Non vs. Jeju Semiconductor Corp |
| Sungchang Autotech vs. Dongbang Transport Logistics | Sungchang Autotech vs. Lotte Non Life Insurance | Sungchang Autotech vs. Genie Music | Sungchang Autotech vs. Sangsin Energy Display |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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