Correlation Between Lotte Non and OptiPharm
Can any of the company-specific risk be diversified away by investing in both Lotte Non and OptiPharm 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 OptiPharm 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 OptiPharm Co, you can compare the effects of market volatilities on Lotte Non and OptiPharm 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 OptiPharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and OptiPharm.
Diversification Opportunities for Lotte Non and OptiPharm
Very poor diversification
The 3 months correlation between Lotte and OptiPharm is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and OptiPharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiPharm 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 OptiPharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiPharm has no effect on the direction of Lotte Non i.e., Lotte Non and OptiPharm go up and down completely randomly.
Pair Corralation between Lotte Non and OptiPharm
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 3.04 times more return on investment than OptiPharm. However, Lotte Non is 3.04 times more volatile than OptiPharm Co. It trades about 0.01 of its potential returns per unit of risk. OptiPharm Co is currently generating about -0.14 per unit of risk. If you would invest 232,000 in Lotte Non Life Insurance on September 4, 2024 and sell it today you would lose (23,500) from holding Lotte Non Life Insurance or give up 10.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.58% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. OptiPharm Co
Performance |
| Timeline |
| Lotte Non Life |
| OptiPharm |
Lotte Non and OptiPharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and OptiPharm
The main advantage of trading using opposite Lotte Non and OptiPharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, OptiPharm 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 OptiPharm will offset losses from the drop in OptiPharm's long position.| Lotte Non vs. AptaBio Therapeutics | Lotte Non vs. Daewoo SBI SPAC | Lotte Non vs. Dream Security co | Lotte Non vs. Microfriend |
| OptiPharm vs. CG Hi Tech | OptiPharm vs. Settlebank | OptiPharm vs. Nable Communications | OptiPharm 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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