Correlation Between Lotte Fine and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Daewoo SBI 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 Daewoo SBI 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 Daewoo SBI SPAC, you can compare the effects of market volatilities on Lotte Fine and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Daewoo SBI.
Diversification Opportunities for Lotte Fine and Daewoo SBI
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Daewoo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Lotte Fine i.e., Lotte Fine and Daewoo SBI go up and down completely randomly.
Pair Corralation between Lotte Fine and Daewoo SBI
Assuming the 90 days trading horizon Lotte Fine Chemical is expected to generate 0.93 times more return on investment than Daewoo SBI. However, Lotte Fine Chemical is 1.08 times less risky than Daewoo SBI. It trades about 0.05 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about -0.18 per unit of risk. If you would invest 3,915,000 in Lotte Fine Chemical on November 3, 2024 and sell it today you would earn a total of 55,000 from holding Lotte Fine Chemical or generate 1.4% 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. Daewoo SBI SPAC
Performance |
| Timeline |
| Lotte Fine Chemical |
| Daewoo SBI SPAC |
Lotte Fine and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Fine and Daewoo SBI
The main advantage of trading using opposite Lotte Fine and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI's long position.| Lotte Fine vs. Insun Environment New | Lotte Fine vs. BooKook Steel Co | Lotte Fine vs. Hankukpackage Co | Lotte Fine vs. Lotte Non Life Insurance |
| Daewoo SBI vs. Automobile Pc | Daewoo SBI vs. Daejung Chemicals Metals | Daewoo SBI vs. Formetal Co | Daewoo SBI vs. Korea Information Communications |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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