Correlation Between Lotte Non and DC Media
Can any of the company-specific risk be diversified away by investing in both Lotte Non and DC Media 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 DC Media 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 DC Media Co, you can compare the effects of market volatilities on Lotte Non and DC Media 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 DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and DC Media.
Diversification Opportunities for Lotte Non and DC Media
Good diversification
The 3 months correlation between Lotte and 263720 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and DC Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media 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 DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media has no effect on the direction of Lotte Non i.e., Lotte Non and DC Media go up and down completely randomly.
Pair Corralation between Lotte Non and DC Media
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.33 times more return on investment than DC Media. However, Lotte Non Life Insurance is 3.06 times less risky than DC Media. It trades about -0.2 of its potential returns per unit of risk. DC Media Co is currently generating about -0.28 per unit of risk. If you would invest 205,500 in Lotte Non Life Insurance on November 5, 2024 and sell it today you would lose (9,400) from holding Lotte Non Life Insurance or give up 4.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. DC Media Co
Performance |
| Timeline |
| Lotte Non Life |
| DC Media |
Lotte Non and DC Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and DC Media
The main advantage of trading using opposite Lotte Non and DC Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, DC Media 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 DC Media will offset losses from the drop in DC Media's long position.| Lotte Non vs. LG Chemicals | Lotte Non vs. Daehan Steel | Lotte Non vs. Finebesteel | Lotte Non vs. Daesung Industrial Co |
| DC Media vs. DC Media CoLtd | DC Media vs. Samsung Special Purpose | DC Media vs. AeroSpace Technology of | DC Media vs. JYP Entertainment |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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