Correlation Between Lotte Chilsung and Sunny Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Sunny Electronics 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 Sunny Electronics 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 Sunny Electronics Corp, you can compare the effects of market volatilities on Lotte Chilsung and Sunny Electronics 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 Sunny Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Sunny Electronics.
Diversification Opportunities for Lotte Chilsung and Sunny Electronics
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and Sunny is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Sunny Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Electronics Corp 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 Sunny Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Electronics Corp has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Sunny Electronics go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Sunny Electronics
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Sunny Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.1 times less risky than Sunny Electronics. The stock trades about -0.02 of its potential returns per unit of risk. The Sunny Electronics Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 159,400 in Sunny Electronics Corp on September 1, 2024 and sell it today you would earn a total of 1,600 from holding Sunny Electronics Corp or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Sunny Electronics Corp
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Sunny Electronics Corp |
Lotte Chilsung and Sunny Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Sunny Electronics
The main advantage of trading using opposite Lotte Chilsung and Sunny Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Sunny Electronics 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 Sunny Electronics will offset losses from the drop in Sunny Electronics' long position.| Lotte Chilsung vs. EV Advanced Material | Lotte Chilsung vs. DAEDUCK ELECTRONICS CoLtd | Lotte Chilsung vs. Hansol Homedeco Co | Lotte Chilsung vs. Hyundai Engineering Plastics |
| Sunny Electronics vs. AptaBio Therapeutics | Sunny Electronics vs. Daewoo SBI SPAC | Sunny Electronics vs. Dream Security co | Sunny Electronics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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