Correlation Between Sung Bo and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Lotte Reit 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 Reit 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 Reit Co, you can compare the effects of market volatilities on Sung Bo and Lotte Reit 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 Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Lotte Reit.
Diversification Opportunities for Sung Bo and Lotte Reit
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sung and Lotte is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit 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 Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Sung Bo i.e., Sung Bo and Lotte Reit go up and down completely randomly.
Pair Corralation between Sung Bo and Lotte Reit
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 1.42 times more return on investment than Lotte Reit. However, Sung Bo is 1.42 times more volatile than Lotte Reit Co. It trades about -0.03 of its potential returns per unit of risk. Lotte Reit Co is currently generating about -0.29 per unit of risk. If you would invest 251,000 in Sung Bo Chemicals on November 4, 2024 and sell it today you would lose (1,000.00) from holding Sung Bo Chemicals or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. Lotte Reit Co
Performance |
| Timeline |
| Sung Bo Chemicals |
| Lotte Reit |
Sung Bo and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and Lotte Reit
The main advantage of trading using opposite Sung Bo and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Lotte Reit 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 Reit will offset losses from the drop in Lotte Reit's long position.| Sung Bo vs. Daesung Industrial Co | Sung Bo vs. DB Financial Investment | Sung Bo vs. KTB Investment Securities | Sung Bo vs. EBEST Investment Securities |
| Lotte Reit vs. Kakao Games Corp | Lotte Reit vs. Nice Information Telecommunication | Lotte Reit vs. Genie Music | Lotte Reit vs. E Investment Development |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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