Correlation Between Lotte Non-Life and Daishin Balance
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Daishin Balance 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 Daishin Balance 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 Daishin Balance No8, you can compare the effects of market volatilities on Lotte Non-Life and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Daishin Balance.
Diversification Opportunities for Lotte Non-Life and Daishin Balance
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Daishin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Daishin Balance No8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No8 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No8 has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Daishin Balance go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Daishin Balance
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.02 times more return on investment than Daishin Balance. However, Lotte Non-Life is 1.02 times more volatile than Daishin Balance No8. It trades about 0.01 of its potential returns per unit of risk. Daishin Balance No8 is currently generating about -0.07 per unit of risk. If you would invest 230,500 in Lotte Non Life Insurance on September 14, 2024 and sell it today you would lose (25,500) from holding Lotte Non Life Insurance or give up 11.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Daishin Balance No8
Performance |
| Timeline |
| Lotte Non Life |
| Daishin Balance No8 |
Lotte Non-Life and Daishin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and Daishin Balance
The main advantage of trading using opposite Lotte Non-Life and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Daishin Balance 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 Daishin Balance will offset losses from the drop in Daishin Balance's long position.| Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. SK Hynix | Lotte Non-Life vs. POSCO Holdings |
| Daishin Balance vs. Sangsin Energy Display | Daishin Balance vs. CJ Seafood Corp | Daishin Balance vs. Korea Air Svc | Daishin Balance vs. Korean Air Lines |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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