Correlation Between Lotte Chilsung and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Busan Ind 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 Busan Ind 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 Busan Ind, you can compare the effects of market volatilities on Lotte Chilsung and Busan Ind 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 Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Busan Ind.
Diversification Opportunities for Lotte Chilsung and Busan Ind
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Busan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind 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 Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Busan Ind go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Busan Ind
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 2.18 times less risky than Busan Ind. The stock trades about -0.05 of its potential returns per unit of risk. The Busan Ind is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,095,598 in Busan Ind on September 1, 2024 and sell it today you would earn a total of 44,402 from holding Busan Ind or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Busan Ind
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Busan Ind |
Lotte Chilsung and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Busan Ind
The main advantage of trading using opposite Lotte Chilsung and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind's 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 |
| Busan Ind vs. ABCO Electronics Co | Busan Ind vs. KG Eco Technology | Busan Ind vs. PJ Electronics Co | Busan Ind vs. DAEDUCK ELECTRONICS CoLtd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |