Correlation Between Lotte Non and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Lotte Non and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Lotte Non and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and SEOJEON ELECTRIC.
Diversification Opportunities for Lotte Non and SEOJEON ELECTRIC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and SEOJEON is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC 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 SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Lotte Non i.e., Lotte Non and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Lotte Non and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Lotte Non is expected to generate 1.86 times less return on investment than SEOJEON ELECTRIC. But when comparing it to its historical volatility, Lotte Non Life Insurance is 1.35 times less risky than SEOJEON ELECTRIC. It trades about 0.07 of its potential returns per unit of risk. SEOJEON ELECTRIC MACHINERY is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 368,000 in SEOJEON ELECTRIC MACHINERY on October 7, 2024 and sell it today you would earn a total of 21,500 from holding SEOJEON ELECTRIC MACHINERY or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| Lotte Non Life |
| SEOJEON ELECTRIC MAC |
Lotte Non and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and SEOJEON ELECTRIC
The main advantage of trading using opposite Lotte Non and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.| Lotte Non vs. Kbi Metal Co | Lotte Non vs. Namhae Chemical | Lotte Non vs. TK Chemical | Lotte Non vs. Haitai Confectionery Foods |
| SEOJEON ELECTRIC vs. Woori Financial Group | SEOJEON ELECTRIC vs. Jb Financial | SEOJEON ELECTRIC vs. Nh Investment And | SEOJEON ELECTRIC vs. Hyundai Heavy Industries |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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