Correlation Between Lotte Fine and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and FNC Entertainment 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 FNC Entertainment 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 FNC Entertainment Co, you can compare the effects of market volatilities on Lotte Fine and FNC Entertainment 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 FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and FNC Entertainment.
Diversification Opportunities for Lotte Fine and FNC Entertainment
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and FNC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment 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 FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Lotte Fine i.e., Lotte Fine and FNC Entertainment go up and down completely randomly.
Pair Corralation between Lotte Fine and FNC Entertainment
Assuming the 90 days trading horizon Lotte Fine is expected to generate 1.9 times less return on investment than FNC Entertainment. But when comparing it to its historical volatility, Lotte Fine Chemical is 1.46 times less risky than FNC Entertainment. It trades about 0.19 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 287,500 in FNC Entertainment Co on November 27, 2024 and sell it today you would earn a total of 35,000 from holding FNC Entertainment Co or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Fine Chemical vs. FNC Entertainment Co
Performance |
| Timeline |
| Lotte Fine Chemical |
| FNC Entertainment |
Lotte Fine and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Fine and FNC Entertainment
The main advantage of trading using opposite Lotte Fine and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, FNC Entertainment 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.| Lotte Fine vs. Hyundai Home Shopping | Lotte Fine vs. Dongnam Chemical Co | Lotte Fine vs. Namhae Chemical | Lotte Fine vs. Homecast CoLtd |
| FNC Entertainment vs. Inzi Display CoLtd | FNC Entertainment vs. KakaoBank Corp | FNC Entertainment vs. Koryo Credit Information | FNC Entertainment vs. Incar Financial Service |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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