Correlation Between Lotte Non and Shin Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Shin Steel 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 Shin Steel 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 Shin Steel Co, you can compare the effects of market volatilities on Lotte Non and Shin Steel 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 Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Shin Steel.
Diversification Opportunities for Lotte Non and Shin Steel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Shin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel 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 Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of Lotte Non i.e., Lotte Non and Shin Steel go up and down completely randomly.
Pair Corralation between Lotte Non and Shin Steel
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Shin Steel. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 1.11 times less risky than Shin Steel. The stock trades about -0.15 of its potential returns per unit of risk. The Shin Steel Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 253,000 in Shin Steel Co on September 4, 2024 and sell it today you would lose (14,000) from holding Shin Steel Co or give up 5.53% 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. Shin Steel Co
Performance |
| Timeline |
| Lotte Non Life |
| Shin Steel |
Lotte Non and Shin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Shin Steel
The main advantage of trading using opposite Lotte Non and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Shin Steel 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 Shin Steel will offset losses from the drop in Shin Steel's long position.| Lotte Non vs. AptaBio Therapeutics | Lotte Non vs. Daewoo SBI SPAC | Lotte Non vs. Dream Security co | Lotte Non vs. Microfriend |
| Shin Steel vs. Samsung Electronics Co | Shin Steel vs. Samsung Electronics Co | Shin Steel vs. LG Energy Solution | Shin Steel vs. SK Hynix |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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