Correlation Between Lotte Chilsung and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Daiyang Metal 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 Daiyang Metal 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 Daiyang Metal Co, you can compare the effects of market volatilities on Lotte Chilsung and Daiyang Metal 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 Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Daiyang Metal.
Diversification Opportunities for Lotte Chilsung and Daiyang Metal
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Daiyang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal 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 Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Daiyang Metal go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Daiyang Metal
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Daiyang Metal. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 3.05 times less risky than Daiyang Metal. The stock trades about -0.03 of its potential returns per unit of risk. The Daiyang Metal Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 335,000 in Daiyang Metal Co on September 2, 2024 and sell it today you would lose (188,100) from holding Daiyang Metal Co or give up 56.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.97% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Daiyang Metal Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Daiyang Metal |
Lotte Chilsung and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Daiyang Metal
The main advantage of trading using opposite Lotte Chilsung and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech Co |
| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Daewoo SBI SPAC | Daiyang Metal vs. Dream Security co | Daiyang Metal 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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