Correlation Between Lotte Non and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Lotte Non and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on Lotte Non and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and KakaoBank Corp.
Diversification Opportunities for Lotte Non and KakaoBank Corp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and KakaoBank is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Lotte Non i.e., Lotte Non and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Lotte Non and KakaoBank Corp
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the KakaoBank Corp. In addition to that, Lotte Non is 1.37 times more volatile than KakaoBank Corp. It trades about -0.18 of its total potential returns per unit of risk. KakaoBank Corp is currently generating about 0.09 per unit of volatility. If you would invest 2,165,000 in KakaoBank Corp on September 1, 2024 and sell it today you would earn a total of 70,000 from holding KakaoBank Corp or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. KakaoBank Corp
Performance |
| Timeline |
| Lotte Non Life |
| KakaoBank Corp |
Lotte Non and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and KakaoBank Corp
The main advantage of trading using opposite Lotte Non and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Lotte Non vs. AptaBio Therapeutics | Lotte Non vs. Daewoo SBI SPAC | Lotte Non vs. Dream Security co | Lotte Non vs. Microfriend |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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