Correlation Between Dongbang Transport and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Lotte Non 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 Dongbang Transport and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Transport Logistics and Lotte Non Life Insurance, you can compare the effects of market volatilities on Dongbang Transport and Lotte Non 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 Dongbang Transport with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Lotte Non.
Diversification Opportunities for Dongbang Transport and Lotte Non
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongbang and Lotte is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Dongbang Transport 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 Dongbang Transport Logistics are associated (or correlated) with Lotte Non. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Lotte Non go up and down completely randomly.
Pair Corralation between Dongbang Transport and Lotte Non
Assuming the 90 days trading horizon Dongbang Transport is expected to generate 5.04 times less return on investment than Lotte Non. But when comparing it to its historical volatility, Dongbang Transport Logistics is 1.07 times less risky than Lotte Non. It trades about 0.01 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 148,500 in Lotte Non Life Insurance on August 31, 2024 and sell it today you would earn a total of 56,500 from holding Lotte Non Life Insurance or generate 38.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Dongbang Transport |
| Lotte Non Life |
Dongbang Transport and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Lotte Non
The main advantage of trading using opposite Dongbang Transport and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Lotte Non 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 Lotte Non will offset losses from the drop in Lotte Non's long position.| Dongbang Transport vs. AptaBio Therapeutics | Dongbang Transport vs. Daewoo SBI SPAC | Dongbang Transport vs. Dream Security co | Dongbang Transport vs. Microfriend |
| Lotte Non vs. Taegu Broadcasting | Lotte Non vs. Nice Information Telecommunication | Lotte Non vs. Daishin Information Communications | Lotte Non vs. Nam Hwa Construction |
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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