Correlation Between Namyang Dairy and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Namyang Dairy 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 Namyang Dairy and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namyang Dairy and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Namyang Dairy 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 Namyang Dairy with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and Lotte Chilsung.
Diversification Opportunities for Namyang Dairy and Lotte Chilsung
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Namyang and Lotte is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy i.e., Namyang Dairy and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Namyang Dairy and Lotte Chilsung
Assuming the 90 days trading horizon Namyang Dairy is expected to generate 40.08 times more return on investment than Lotte Chilsung. However, Namyang Dairy is 40.08 times more volatile than Lotte Chilsung Beverage. It trades about 0.07 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.03 per unit of risk. If you would invest 5,021,343 in Namyang Dairy on August 31, 2024 and sell it today you would earn a total of 1,768,657 from holding Namyang Dairy or generate 35.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Namyang Dairy vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Namyang Dairy |
| Lotte Chilsung Beverage |
Namyang Dairy and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namyang Dairy and Lotte Chilsung
The main advantage of trading using opposite Namyang Dairy and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy 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.| Namyang Dairy vs. Korea Real Estate | Namyang Dairy vs. Korea Ratings Co | Namyang Dairy vs. IQuest Co | Namyang Dairy vs. Wonbang Tech Co |
| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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