Correlation Between Lotte Non and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical, you can compare the effects of market volatilities on Lotte Non and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Miwon Chemical.
Diversification Opportunities for Lotte Non and Miwon Chemical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Miwon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Lotte Non i.e., Lotte Non and Miwon Chemical go up and down completely randomly.
Pair Corralation between Lotte Non and Miwon Chemical
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.22 times more return on investment than Miwon Chemical. However, Lotte Non is 1.22 times more volatile than Miwon Chemical. It trades about 0.0 of its potential returns per unit of risk. Miwon Chemical is currently generating about -0.03 per unit of risk. If you would invest 204,500 in Lotte Non Life Insurance on October 17, 2024 and sell it today you would lose (500.00) from holding Lotte Non Life Insurance or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Miwon Chemical
Performance |
| Timeline |
| Lotte Non Life |
| Miwon Chemical |
Lotte Non and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Miwon Chemical
The main advantage of trading using opposite Lotte Non and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Lotte Non vs. Miwon Chemicals Co | Lotte Non vs. KB Financial Group | Lotte Non vs. Kukdong Oil Chemicals | Lotte Non vs. BNK Financial Group |
| Miwon Chemical vs. Lotte Non Life Insurance | Miwon Chemical vs. ABOV Semiconductor Co | Miwon Chemical vs. Samsung Life Insurance | Miwon Chemical vs. Shinhan Financial Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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