Correlation Between Samick Musical and Lotte Corp
Can any of the company-specific risk be diversified away by investing in both Samick Musical and Lotte 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 Samick Musical and Lotte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samick Musical Instruments and Lotte Corp, you can compare the effects of market volatilities on Samick Musical and Lotte 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 Samick Musical with a short position of Lotte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samick Musical and Lotte Corp.
Diversification Opportunities for Samick Musical and Lotte Corp
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samick and Lotte is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and Lotte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Corp and Samick Musical 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 Samick Musical Instruments are associated (or correlated) with Lotte Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Corp has no effect on the direction of Samick Musical i.e., Samick Musical and Lotte Corp go up and down completely randomly.
Pair Corralation between Samick Musical and Lotte Corp
Assuming the 90 days trading horizon Samick Musical Instruments is expected to generate 0.71 times more return on investment than Lotte Corp. However, Samick Musical Instruments is 1.4 times less risky than Lotte Corp. It trades about -0.06 of its potential returns per unit of risk. Lotte Corp is currently generating about -0.09 per unit of risk. If you would invest 120,000 in Samick Musical Instruments on September 4, 2024 and sell it today you would lose (9,600) from holding Samick Musical Instruments or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samick Musical Instruments vs. Lotte Corp
Performance |
| Timeline |
| Samick Musical Instr |
| Lotte Corp |
Samick Musical and Lotte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samick Musical and Lotte Corp
The main advantage of trading using opposite Samick Musical and Lotte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samick Musical position performs unexpectedly, Lotte 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 Lotte Corp will offset losses from the drop in Lotte Corp's long position.| Samick Musical vs. Pureun Mutual Savings | Samick Musical vs. Korea Shipbuilding Offshore | Samick Musical vs. Kukdong Oil Chemicals | Samick Musical vs. Sung Bo Chemicals |
| Lotte Corp vs. TS Investment Corp | Lotte Corp vs. Pureun Mutual Savings | Lotte Corp vs. Samick Musical Instruments | Lotte Corp vs. Nh Investment And |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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