Correlation Between Sung Bo and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Lotte Data 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 Sung Bo and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and Lotte Data Communication, you can compare the effects of market volatilities on Sung Bo and Lotte Data 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 Sung Bo with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Lotte Data.
Diversification Opportunities for Sung Bo and Lotte Data
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sung and Lotte is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Sung Bo i.e., Sung Bo and Lotte Data go up and down completely randomly.
Pair Corralation between Sung Bo and Lotte Data
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.23 times more return on investment than Lotte Data. However, Sung Bo Chemicals is 4.37 times less risky than Lotte Data. It trades about -0.34 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.23 per unit of risk. If you would invest 263,000 in Sung Bo Chemicals on September 1, 2024 and sell it today you would lose (11,500) from holding Sung Bo Chemicals or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. Lotte Data Communication
Performance |
| Timeline |
| Sung Bo Chemicals |
| Lotte Data Communication |
Sung Bo and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and Lotte Data
The main advantage of trading using opposite Sung Bo and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Sung Bo vs. AptaBio Therapeutics | Sung Bo vs. Daewoo SBI SPAC | Sung Bo vs. Dream Security co | Sung Bo vs. Microfriend |
| Lotte Data vs. SK Holdings Co | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind | Lotte Data vs. Mirae Asset Daewoo |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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