Correlation Between Lotte Non and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Lotte Non and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Hanjoo Light.
Diversification Opportunities for Lotte Non and Hanjoo Light
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Hanjoo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Lotte Non i.e., Lotte Non and Hanjoo Light go up and down completely randomly.
Pair Corralation between Lotte Non and Hanjoo Light
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.23 times more return on investment than Hanjoo Light. However, Lotte Non is 1.23 times more volatile than Hanjoo Light Metal. It trades about -0.15 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.33 per unit of risk. If you would invest 221,500 in Lotte Non Life Insurance on August 29, 2024 and sell it today you would lose (20,000) from holding Lotte Non Life Insurance or give up 9.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Hanjoo Light Metal
Performance |
| Timeline |
| Lotte Non Life |
| Hanjoo Light Metal |
Lotte Non and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Hanjoo Light
The main advantage of trading using opposite Lotte Non and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Lotte Non vs. AptaBio Therapeutics | Lotte Non vs. Daewoo SBI SPAC | Lotte Non vs. Dream Security co | Lotte Non vs. Microfriend |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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