Correlation Between Hwasung Industrial and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and Lotte Chilsung 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 Hwasung Industrial and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hwasung Industrial Co and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Hwasung Industrial and Lotte Chilsung 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 Hwasung Industrial with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and Lotte Chilsung.
Diversification Opportunities for Hwasung Industrial and Lotte Chilsung
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hwasung and Lotte is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Hwasung Industrial 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 Hwasung Industrial Co are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Hwasung Industrial and Lotte Chilsung
Assuming the 90 days trading horizon Hwasung Industrial Co is expected to generate 1.09 times more return on investment than Lotte Chilsung. However, Hwasung Industrial is 1.09 times more volatile than Lotte Chilsung Beverage. It trades about -0.19 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.28 per unit of risk. If you would invest 995,000 in Hwasung Industrial Co on November 8, 2024 and sell it today you would lose (46,000) from holding Hwasung Industrial Co or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Hwasung Industrial Co vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Hwasung Industrial |
| Lotte Chilsung Beverage |
Hwasung Industrial and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwasung Industrial and Lotte Chilsung
The main advantage of trading using opposite Hwasung Industrial and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwasung Industrial position performs unexpectedly, Lotte Chilsung 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 Chilsung will offset losses from the drop in Lotte Chilsung's long position.| Hwasung Industrial vs. Sewoon Medical Co | Hwasung Industrial vs. Daol Investment Securities | Hwasung Industrial vs. Shinhan Inverse Silver | Hwasung Industrial vs. Sangsangin Investment Securities |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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