Correlation Between Lotte Fine and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Tae Kyung 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 Lotte Fine and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Fine Chemical and Tae Kyung Chemical, you can compare the effects of market volatilities on Lotte Fine and Tae Kyung 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 Lotte Fine with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Tae Kyung.
Diversification Opportunities for Lotte Fine and Tae Kyung
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Tae is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Lotte Fine 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 Lotte Fine Chemical are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Lotte Fine i.e., Lotte Fine and Tae Kyung go up and down completely randomly.
Pair Corralation between Lotte Fine and Tae Kyung
Assuming the 90 days trading horizon Lotte Fine Chemical is expected to under-perform the Tae Kyung. In addition to that, Lotte Fine is 1.69 times more volatile than Tae Kyung Chemical. It trades about -0.4 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.01 per unit of volatility. If you would invest 1,089,000 in Tae Kyung Chemical on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Tae Kyung Chemical or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Fine Chemical vs. Tae Kyung Chemical
Performance |
| Timeline |
| Lotte Fine Chemical |
| Tae Kyung Chemical |
Lotte Fine and Tae Kyung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Fine and Tae Kyung
The main advantage of trading using opposite Lotte Fine and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.| Lotte Fine vs. LG Chemicals | Lotte Fine vs. POSCO Holdings | Lotte Fine vs. Lotte Chemical Corp | Lotte Fine vs. Hyundai Steel |
| Tae Kyung vs. AptaBio Therapeutics | Tae Kyung vs. Daewoo SBI SPAC | Tae Kyung vs. Dream Security co | Tae Kyung vs. Microfriend |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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