Correlation Between Seoul Food and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Lotte Chilsung 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 Seoul Food and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Seoul Food and Lotte Chilsung 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 Seoul Food with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Lotte Chilsung.
Diversification Opportunities for Seoul Food and Lotte Chilsung
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Seoul and Lotte is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Seoul Food i.e., Seoul Food and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Seoul Food and Lotte Chilsung
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Lotte Chilsung. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.22 times less risky than Lotte Chilsung. The stock trades about -0.04 of its potential returns per unit of risk. The Lotte Chilsung Beverage is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 15,959,300 in Lotte Chilsung Beverage on August 29, 2024 and sell it today you would lose (4,059,300) from holding Lotte Chilsung Beverage or give up 25.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Seoul Food Industrial |
| Lotte Chilsung Beverage |
Seoul Food and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Lotte Chilsung
The main advantage of trading using opposite Seoul Food and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Lotte Chilsung 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 Chilsung will offset losses from the drop in Lotte Chilsung's long position.| Seoul Food vs. Kbi Metal Co | Seoul Food vs. SBI Investment KOREA | Seoul Food vs. MetaLabs Co | Seoul Food vs. Cheryong Industrial CoLtd |
| Lotte Chilsung vs. Stic Investments | Lotte Chilsung vs. Heungkuk Metaltech CoLtd | Lotte Chilsung vs. Pureun Mutual Savings | Lotte Chilsung vs. Dongbang Transport Logistics |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |