Correlation Between Lotte Non and GiantStep
Can any of the company-specific risk be diversified away by investing in both Lotte Non and GiantStep 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 GiantStep 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 GiantStep Co, you can compare the effects of market volatilities on Lotte Non and GiantStep 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 GiantStep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and GiantStep.
Diversification Opportunities for Lotte Non and GiantStep
Poor diversification
The 3 months correlation between Lotte and GiantStep is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and GiantStep Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GiantStep 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 GiantStep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GiantStep has no effect on the direction of Lotte Non i.e., Lotte Non and GiantStep go up and down completely randomly.
Pair Corralation between Lotte Non and GiantStep
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the GiantStep. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 2.88 times less risky than GiantStep. The stock trades about -0.1 of its potential returns per unit of risk. The GiantStep Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 622,000 in GiantStep Co on October 24, 2024 and sell it today you would earn a total of 6,000 from holding GiantStep Co or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. GiantStep Co
Performance |
| Timeline |
| Lotte Non Life |
| GiantStep |
Lotte Non and GiantStep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and GiantStep
The main advantage of trading using opposite Lotte Non and GiantStep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, GiantStep 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 GiantStep will offset losses from the drop in GiantStep's long position.| Lotte Non vs. KB Financial Group | Lotte Non vs. Shinhan Financial Group | Lotte Non vs. Hana Financial | Lotte Non vs. Woori Financial Group |
| GiantStep vs. Daejung Chemicals Metals | GiantStep vs. SK Chemicals Co | GiantStep vs. Pureun Mutual Savings | GiantStep vs. Hannong Chemicals |
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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