Correlation Between Lotte Chilsung and Heungkuk Metaltech
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Heungkuk Metaltech 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 Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on Lotte Chilsung and Heungkuk Metaltech 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 Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Heungkuk Metaltech.
Diversification Opportunities for Lotte Chilsung and Heungkuk Metaltech
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Heungkuk is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd 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 Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Heungkuk Metaltech go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Heungkuk Metaltech
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Heungkuk Metaltech. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.05 times less risky than Heungkuk Metaltech. The stock trades about -0.03 of its potential returns per unit of risk. The Heungkuk Metaltech CoLtd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 506,873 in Heungkuk Metaltech CoLtd on October 14, 2024 and sell it today you would earn a total of 24,127 from holding Heungkuk Metaltech CoLtd or generate 4.76% 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. Heungkuk Metaltech CoLtd
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Heungkuk Metaltech CoLtd |
Lotte Chilsung and Heungkuk Metaltech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Heungkuk Metaltech
The main advantage of trading using opposite Lotte Chilsung and Heungkuk Metaltech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Heungkuk Metaltech 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 Heungkuk Metaltech will offset losses from the drop in Heungkuk Metaltech's long position.| Lotte Chilsung vs. System and Application | Lotte Chilsung vs. Hanshin Construction Co | Lotte Chilsung vs. Dongbang Transport Logistics | Lotte Chilsung vs. Daou Data Corp |
| Heungkuk Metaltech vs. Ssangyong Materials Corp | Heungkuk Metaltech vs. LS Materials | Heungkuk Metaltech vs. iNtRON Biotechnology | Heungkuk Metaltech vs. Polaris Office Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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