Correlation Between Lotte Chilsung and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung 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 Lotte Chilsung and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chilsung Beverage and Lotte Non Life Insurance, you can compare the effects of market volatilities on Lotte Chilsung 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 Lotte Chilsung with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Lotte Non.
Diversification Opportunities for Lotte Chilsung and Lotte Non
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Lotte is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage 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 Lotte Chilsung 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 Chilsung Beverage 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 Lotte Chilsung i.e., Lotte Chilsung and Lotte Non go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Lotte Non
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Lotte Non. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.38 times less risky than Lotte Non. The stock trades about -0.13 of its potential returns per unit of risk. The Lotte Non Life Insurance is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 238,000 in Lotte Non Life Insurance on October 12, 2024 and sell it today you would lose (28,000) from holding Lotte Non Life Insurance or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Lotte Non Life |
Lotte Chilsung and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Lotte Non
The main advantage of trading using opposite Lotte Chilsung and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung 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.| Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. KB Financial Group | Lotte Chilsung vs. Shinhan Financial Group |
| Lotte Non vs. Lotte Chilsung Beverage | Lotte Non vs. Hankukpackage Co | Lotte Non vs. Daewon Media Co | Lotte Non vs. Hankook Furniture 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 CEOs Directory module to screen CEOs from public companies around the world.
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