Correlation Between Lotte Non and Coloray International
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Coloray International 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 Coloray International 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 Coloray International Investment, you can compare the effects of market volatilities on Lotte Non and Coloray International 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 Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Coloray International.
Diversification Opportunities for Lotte Non and Coloray International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Coloray is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of Lotte Non i.e., Lotte Non and Coloray International go up and down completely randomly.
Pair Corralation between Lotte Non and Coloray International
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Coloray International. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Non Life Insurance is 1.16 times less risky than Coloray International. The stock trades about -0.02 of its potential returns per unit of risk. The Coloray International Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 59,000 in Coloray International Investment on October 30, 2024 and sell it today you would earn a total of 13,900 from holding Coloray International Investment or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Coloray International Investme
Performance |
| Timeline |
| Lotte Non Life |
| Coloray International |
Lotte Non and Coloray International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Coloray International
The main advantage of trading using opposite Lotte Non and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Coloray International 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 Coloray International will offset losses from the drop in Coloray International's long position.| Lotte Non vs. Insung Information Co | Lotte Non vs. Nice Information Telecommunication | Lotte Non vs. Lotte Data Communication | Lotte Non vs. Alton Sports CoLtd |
| Coloray International vs. Hwasung Industrial Co | Coloray International vs. Hyundai Industrial Co | Coloray International vs. Shinil Industrial Co | Coloray International vs. Eagon Industrial Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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