Correlation Between Lotte Fine and APS Holdings
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and APS Holdings 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 APS Holdings 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 APS Holdings, you can compare the effects of market volatilities on Lotte Fine and APS Holdings 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 APS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and APS Holdings.
Diversification Opportunities for Lotte Fine and APS Holdings
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and APS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings 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 APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of Lotte Fine i.e., Lotte Fine and APS Holdings go up and down completely randomly.
Pair Corralation between Lotte Fine and APS Holdings
Assuming the 90 days trading horizon Lotte Fine Chemical is expected to generate 0.66 times more return on investment than APS Holdings. However, Lotte Fine Chemical is 1.53 times less risky than APS Holdings. It trades about -0.07 of its potential returns per unit of risk. APS Holdings is currently generating about -0.06 per unit of risk. If you would invest 6,070,000 in Lotte Fine Chemical on September 12, 2024 and sell it today you would lose (2,355,000) from holding Lotte Fine Chemical or give up 38.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Fine Chemical vs. APS Holdings
Performance |
| Timeline |
| Lotte Fine Chemical |
| APS Holdings |
Lotte Fine and APS Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Fine and APS Holdings
The main advantage of trading using opposite Lotte Fine and APS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, APS Holdings 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 APS Holdings will offset losses from the drop in APS Holdings' long position.| Lotte Fine vs. Yura Tech Co | Lotte Fine vs. Hwangkum Steel Technology | Lotte Fine vs. Vitzro Tech Co | Lotte Fine vs. Foodnamoo |
| APS Holdings vs. Coloray International Investment | APS Holdings vs. Lotte Fine Chemical | APS Holdings vs. E Investment Development | APS Holdings vs. Hannong Chemicals |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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