Correlation Between Lotte Non and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Lotte Non and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on Lotte Non and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and TOPMATERIAL.
Diversification Opportunities for Lotte Non and TOPMATERIAL
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and TOPMATERIAL is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Lotte Non i.e., Lotte Non and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Lotte Non and TOPMATERIAL
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the TOPMATERIAL. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 2.44 times less risky than TOPMATERIAL. The stock trades about -0.15 of its potential returns per unit of risk. The TOPMATERIAL LTD is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,650,000 in TOPMATERIAL LTD on October 27, 2024 and sell it today you would earn a total of 110,000 from holding TOPMATERIAL LTD or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. TOPMATERIAL LTD
Performance |
| Timeline |
| Lotte Non Life |
| TOPMATERIAL LTD |
Lotte Non and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and TOPMATERIAL
The main advantage of trading using opposite Lotte Non and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL'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 |
| TOPMATERIAL vs. Pureun Mutual Savings | TOPMATERIAL vs. Daechang Steel Co | TOPMATERIAL vs. Dong A Steel Technology | TOPMATERIAL vs. Jeju 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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