Correlation Between Lotte Chilsung and Sung Bo
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Sung Bo 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 Sung Bo 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 Sung Bo Chemicals, you can compare the effects of market volatilities on Lotte Chilsung and Sung Bo 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 Sung Bo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Sung Bo.
Diversification Opportunities for Lotte Chilsung and Sung Bo
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Sung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Sung Bo Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Bo Chemicals 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 Sung Bo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Bo Chemicals has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Sung Bo go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Sung Bo
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 3.16 times more return on investment than Sung Bo. However, Lotte Chilsung is 3.16 times more volatile than Sung Bo Chemicals. It trades about 0.01 of its potential returns per unit of risk. Sung Bo Chemicals is currently generating about -0.27 per unit of risk. If you would invest 11,830,000 in Lotte Chilsung Beverage on August 28, 2024 and sell it today you would lose (10,000) from holding Lotte Chilsung Beverage or give up 0.08% 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. Sung Bo Chemicals
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Sung Bo Chemicals |
Lotte Chilsung and Sung Bo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Sung Bo
The main advantage of trading using opposite Lotte Chilsung and Sung Bo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Sung Bo 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 Sung Bo will offset losses from the drop in Sung Bo's long position.| Lotte Chilsung vs. Stic Investments | Lotte Chilsung vs. Heungkuk Metaltech CoLtd | Lotte Chilsung vs. Pureun Mutual Savings | Lotte Chilsung vs. Dongbang Transport Logistics |
| Sung Bo vs. AptaBio Therapeutics | Sung Bo vs. Daewoo SBI SPAC | Sung Bo vs. Dream Security co | Sung Bo vs. Microfriend |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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