Correlation Between Lotte Chilsung and Eugene Investment
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Eugene Investment 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 Eugene Investment 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 Eugene Investment Securities, you can compare the effects of market volatilities on Lotte Chilsung and Eugene Investment 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 Eugene Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Eugene Investment.
Diversification Opportunities for Lotte Chilsung and Eugene Investment
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Eugene is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Eugene Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Investment 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 Eugene Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Investment has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Eugene Investment go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Eugene Investment
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.46 times more return on investment than Eugene Investment. However, Lotte Chilsung Beverage is 2.16 times less risky than Eugene Investment. It trades about -0.05 of its potential returns per unit of risk. Eugene Investment Securities is currently generating about -0.13 per unit of risk. If you would invest 13,670,000 in Lotte Chilsung Beverage on September 19, 2024 and sell it today you would lose (1,680,000) from holding Lotte Chilsung Beverage or give up 12.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Eugene Investment Securities
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Eugene Investment |
Lotte Chilsung and Eugene Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Eugene Investment
The main advantage of trading using opposite Lotte Chilsung and Eugene Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Eugene Investment 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 Eugene Investment will offset losses from the drop in Eugene Investment's long position.| Lotte Chilsung vs. Automobile Pc | Lotte Chilsung vs. Lotte Data Communication | Lotte Chilsung vs. Iljin Display | Lotte Chilsung vs. Digital Power Communications |
| Eugene Investment vs. KyungIn Electronics Co | Eugene Investment vs. Sungwoo Electronics Co | Eugene Investment vs. DAEDUCK ELECTRONICS CoLtd | Eugene Investment vs. Lotte Chilsung Beverage |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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