Correlation Between Lotte Non and Hurum
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Hurum 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 Hurum 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 Hurum Co, you can compare the effects of market volatilities on Lotte Non and Hurum 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 Hurum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Hurum.
Diversification Opportunities for Lotte Non and Hurum
Poor diversification
The 3 months correlation between Lotte and Hurum is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Hurum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurum 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 Hurum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurum has no effect on the direction of Lotte Non i.e., Lotte Non and Hurum go up and down completely randomly.
Pair Corralation between Lotte Non and Hurum
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Hurum. In addition to that, Lotte Non is 1.45 times more volatile than Hurum Co. It trades about -0.1 of its total potential returns per unit of risk. Hurum Co is currently generating about 0.1 per unit of volatility. If you would invest 73,900 in Hurum Co on November 3, 2024 and sell it today you would earn a total of 1,200 from holding Hurum Co or generate 1.62% 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. Hurum Co
Performance |
| Timeline |
| Lotte Non Life |
| Hurum |
Lotte Non and Hurum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Hurum
The main advantage of trading using opposite Lotte Non and Hurum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Hurum 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 Hurum will offset losses from the drop in Hurum's long position.| Lotte Non vs. LG Household Healthcare | Lotte Non vs. Solution Advanced Technology | Lotte Non vs. Lion Chemtech Co | Lotte Non vs. LG Household Healthcare |
| Hurum vs. TK Chemical | Hurum vs. Dongnam Chemical Co | Hurum vs. Youngchang Chemical Co | Hurum vs. Nice Information Telecommunication |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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