Correlation Between Lotte Non-Life and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Daewoo SBI 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-Life and Daewoo SBI 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 Daewoo SBI SPAC, you can compare the effects of market volatilities on Lotte Non-Life and Daewoo SBI 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-Life with a short position of Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Daewoo SBI.
Diversification Opportunities for Lotte Non-Life and Daewoo SBI
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Daewoo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC and Lotte Non-Life 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Daewoo SBI go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Daewoo SBI
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Daewoo SBI. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 1.23 times less risky than Daewoo SBI. The stock trades about -0.14 of its potential returns per unit of risk. The Daewoo SBI SPAC is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 271,500 in Daewoo SBI SPAC on November 27, 2024 and sell it today you would lose (14,000) from holding Daewoo SBI SPAC or give up 5.16% 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. Daewoo SBI SPAC
Performance |
| Timeline |
| Lotte Non Life |
| Daewoo SBI SPAC |
Lotte Non-Life and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and Daewoo SBI
The main advantage of trading using opposite Lotte Non-Life and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI's long position.| Lotte Non-Life vs. JYP Entertainment Corp | Lotte Non-Life vs. Iljin Display | Lotte Non-Life vs. Digital Multimedia Technology | Lotte Non-Life vs. Playgram Co |
| Daewoo SBI vs. Leaders Technology Investment | Daewoo SBI vs. KTB Investment Securities | Daewoo SBI vs. Duksan Hi Metal | Daewoo SBI vs. Hyundai Industrial Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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