Correlation Between Lotte Fine and Hotel Shilla
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Hotel Shilla 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 Hotel Shilla 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 Hotel Shilla Co, you can compare the effects of market volatilities on Lotte Fine and Hotel Shilla 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 Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Hotel Shilla.
Diversification Opportunities for Lotte Fine and Hotel Shilla
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Hotel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla 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 Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of Lotte Fine i.e., Lotte Fine and Hotel Shilla go up and down completely randomly.
Pair Corralation between Lotte Fine and Hotel Shilla
Assuming the 90 days trading horizon Lotte Fine Chemical is expected to generate 1.47 times more return on investment than Hotel Shilla. However, Lotte Fine is 1.47 times more volatile than Hotel Shilla Co. It trades about -0.02 of its potential returns per unit of risk. Hotel Shilla Co is currently generating about -0.11 per unit of risk. If you would invest 5,630,000 in Lotte Fine Chemical on October 25, 2024 and sell it today you would lose (1,595,000) from holding Lotte Fine Chemical or give up 28.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Fine Chemical vs. Hotel Shilla Co
Performance |
| Timeline |
| Lotte Fine Chemical |
| Hotel Shilla |
Lotte Fine and Hotel Shilla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Fine and Hotel Shilla
The main advantage of trading using opposite Lotte Fine and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.| Lotte Fine vs. SCI Information Service | Lotte Fine vs. ENF Technology Co | Lotte Fine vs. DataSolution | Lotte Fine vs. Daou Technology |
| Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. LG Energy Solution | Hotel Shilla vs. SK Hynix |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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