Correlation Between Lotte Non and Daesung Hi
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Daesung Hi 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 Daesung Hi 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 Daesung Hi Tech Co, you can compare the effects of market volatilities on Lotte Non and Daesung Hi 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 Daesung Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Daesung Hi.
Diversification Opportunities for Lotte Non and Daesung Hi
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Daesung is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech 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 Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of Lotte Non i.e., Lotte Non and Daesung Hi go up and down completely randomly.
Pair Corralation between Lotte Non and Daesung Hi
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.83 times more return on investment than Daesung Hi. However, Lotte Non Life Insurance is 1.21 times less risky than Daesung Hi. It trades about 0.18 of its potential returns per unit of risk. Daesung Hi Tech Co is currently generating about -0.09 per unit of risk. If you would invest 200,000 in Lotte Non Life Insurance on October 12, 2024 and sell it today you would earn a total of 10,000 from holding Lotte Non Life Insurance or generate 5.0% 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. Daesung Hi Tech Co
Performance |
| Timeline |
| Lotte Non Life |
| Daesung Hi Tech |
Lotte Non and Daesung Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Daesung Hi
The main advantage of trading using opposite Lotte Non and Daesung Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Daesung Hi 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 Daesung Hi will offset losses from the drop in Daesung Hi's long position.| Lotte Non vs. DB Financial Investment | Lotte Non vs. DRB Industrial Co | Lotte Non vs. Daesung Industrial Co | Lotte Non vs. Cheryong Industrial CoLtd |
| Daesung Hi vs. KB Financial Group | Daesung Hi vs. DB Insurance Co | Daesung Hi vs. Hanwha Life Insurance | Daesung Hi vs. Lotte Non Life Insurance |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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