Correlation Between Lotte Non and EV Advanced
Can any of the company-specific risk be diversified away by investing in both Lotte Non and EV Advanced 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 EV Advanced 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 EV Advanced Material, you can compare the effects of market volatilities on Lotte Non and EV Advanced 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 EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and EV Advanced.
Diversification Opportunities for Lotte Non and EV Advanced
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and 131400 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material 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 EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of Lotte Non i.e., Lotte Non and EV Advanced go up and down completely randomly.
Pair Corralation between Lotte Non and EV Advanced
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.76 times more return on investment than EV Advanced. However, Lotte Non Life Insurance is 1.31 times less risky than EV Advanced. It trades about -0.03 of its potential returns per unit of risk. EV Advanced Material is currently generating about -0.07 per unit of risk. If you would invest 205,000 in Lotte Non Life Insurance on November 1, 2024 and sell it today you would lose (7,500) from holding Lotte Non Life Insurance or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. EV Advanced Material
Performance |
| Timeline |
| Lotte Non Life |
| EV Advanced Material |
Lotte Non and EV Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and EV Advanced
The main advantage of trading using opposite Lotte Non and EV Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, EV Advanced 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 EV Advanced will offset losses from the drop in EV Advanced's long position.| Lotte Non vs. Shinhan Inverse Silver | Lotte Non vs. Digital Power Communications | Lotte Non vs. Hanjin Transportation Co | Lotte Non vs. Dongbang Transport Logistics |
| EV Advanced vs. Samsung Electronics Co | EV Advanced vs. Samsung Electronics Co | EV Advanced vs. SK Hynix | EV Advanced vs. HMM 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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