Correlation Between Lotte Fine and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical, you can compare the effects of market volatilities on Lotte Fine and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Miwon Chemical.
Diversification Opportunities for Lotte Fine and Miwon Chemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Miwon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Lotte Fine i.e., Lotte Fine and Miwon Chemical go up and down completely randomly.
Pair Corralation between Lotte Fine and Miwon Chemical
Assuming the 90 days trading horizon Lotte Fine Chemical is expected to under-perform the Miwon Chemical. In addition to that, Lotte Fine is 2.01 times more volatile than Miwon Chemical. It trades about -0.02 of its total potential returns per unit of risk. Miwon Chemical is currently generating about 0.06 per unit of volatility. If you would invest 5,834,431 in Miwon Chemical on November 19, 2024 and sell it today you would earn a total of 1,825,569 from holding Miwon Chemical or generate 31.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Fine Chemical vs. Miwon Chemical
Performance |
| Timeline |
| Lotte Fine Chemical |
| Miwon Chemical |
Lotte Fine and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Fine and Miwon Chemical
The main advantage of trading using opposite Lotte Fine and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Lotte Fine vs. Coloray International Investment | Lotte Fine vs. Hanwha Life Insurance | Lotte Fine vs. Sangsangin Investment Securities | Lotte Fine vs. Hana Financial |
| Miwon Chemical vs. Hanjoo Light Metal | Miwon Chemical vs. Kukil Metal Co | Miwon Chemical vs. Heungkuk Metaltech CoLtd | Miwon Chemical vs. DRB Industrial 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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