Correlation Between Lotte Non and Microfriend
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Microfriend 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 Microfriend 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 Microfriend, you can compare the effects of market volatilities on Lotte Non and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Microfriend.
Diversification Opportunities for Lotte Non and Microfriend
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Microfriend is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Lotte Non i.e., Lotte Non and Microfriend go up and down completely randomly.
Pair Corralation between Lotte Non and Microfriend
Assuming the 90 days trading horizon Lotte Non is expected to generate 1.18 times less return on investment than Microfriend. But when comparing it to its historical volatility, Lotte Non Life Insurance is 1.75 times less risky than Microfriend. It trades about 0.18 of its potential returns per unit of risk. Microfriend is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 290,000 in Microfriend on October 12, 2024 and sell it today you would earn a total of 16,000 from holding Microfriend or generate 5.52% 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. Microfriend
Performance |
| Timeline |
| Lotte Non Life |
| Microfriend |
Lotte Non and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Microfriend
The main advantage of trading using opposite Lotte Non and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.| Lotte Non vs. Lotte Chilsung Beverage | Lotte Non vs. Hankukpackage Co | Lotte Non vs. Daewon Media Co | Lotte Non vs. Hankook Furniture Co |
| Microfriend vs. GS Retail Co | Microfriend vs. InnoTherapy | Microfriend vs. Aprogen Healthcare Games | Microfriend 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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