Correlation Between Lotte Chilsung and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Posco Chemical 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 Posco Chemical 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 Posco Chemical Co, you can compare the effects of market volatilities on Lotte Chilsung and Posco Chemical 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 Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Posco Chemical.
Diversification Opportunities for Lotte Chilsung and Posco Chemical
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Posco is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical 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 Posco Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco Chemical has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Posco Chemical go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Posco Chemical
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.46 times more return on investment than Posco Chemical. However, Lotte Chilsung Beverage is 2.19 times less risky than Posco Chemical. It trades about -0.05 of its potential returns per unit of risk. Posco Chemical Co is currently generating about -0.06 per unit of risk. If you would invest 14,790,000 in Lotte Chilsung Beverage on September 4, 2024 and sell it today you would lose (2,830,000) from holding Lotte Chilsung Beverage or give up 19.13% 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. Posco Chemical Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Posco Chemical |
Lotte Chilsung and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Posco Chemical
The main advantage of trading using opposite Lotte Chilsung and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Posco Chemical 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 Posco Chemical will offset losses from the drop in Posco Chemical's long position.| Lotte Chilsung vs. LG Display | Lotte Chilsung vs. Hyundai Motor | Lotte Chilsung vs. Hyundai Motor Co | Lotte Chilsung vs. Hyundai Motor Co |
| Posco Chemical vs. Hanilcmt Co | Posco Chemical vs. LG Uplus | Posco Chemical vs. ASTORY CoLtd | Posco Chemical vs. AnterogenCoLtd |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |