Correlation Between Lotte Non and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Lotte Non and BGF Retail 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 BGF Retail 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 BGF Retail Co, you can compare the effects of market volatilities on Lotte Non and BGF Retail 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 BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and BGF Retail.
Diversification Opportunities for Lotte Non and BGF Retail
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and BGF is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail 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 BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Lotte Non i.e., Lotte Non and BGF Retail go up and down completely randomly.
Pair Corralation between Lotte Non and BGF Retail
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.88 times more return on investment than BGF Retail. However, Lotte Non Life Insurance is 1.13 times less risky than BGF Retail. It trades about 0.0 of its potential returns per unit of risk. BGF Retail Co is currently generating about 0.0 per unit of risk. If you would invest 204,500 in Lotte Non Life Insurance on October 17, 2024 and sell it today you would lose (500.00) from holding Lotte Non Life Insurance or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. BGF Retail Co
Performance |
| Timeline |
| Lotte Non Life |
| BGF Retail |
Lotte Non and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and BGF Retail
The main advantage of trading using opposite Lotte Non and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| Lotte Non vs. Miwon Chemicals Co | Lotte Non vs. KB Financial Group | Lotte Non vs. Kukdong Oil Chemicals | Lotte Non vs. BNK Financial Group |
| BGF Retail vs. Drb Industrial | BGF Retail vs. Myoung Shin Industrial | BGF Retail vs. DRB Industrial Co | BGF Retail vs. Lotte Non Life Insurance |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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