Correlation Between Lotte Chilsung and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Seoul 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 Seoul 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 Seoul Electronics Telecom, you can compare the effects of market volatilities on Lotte Chilsung and Seoul 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 Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Seoul Electronics.
Diversification Opportunities for Lotte Chilsung and Seoul Electronics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Seoul is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom 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 Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Seoul Electronics go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Seoul Electronics
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.65 times more return on investment than Seoul Electronics. However, Lotte Chilsung Beverage is 1.54 times less risky than Seoul Electronics. It trades about -0.02 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.06 per unit of risk. If you would invest 15,173,700 in Lotte Chilsung Beverage on August 27, 2024 and sell it today you would lose (3,183,700) from holding Lotte Chilsung Beverage or give up 20.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Seoul Electronics Telecom |
Lotte Chilsung and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Seoul Electronics
The main advantage of trading using opposite Lotte Chilsung and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Seoul 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Lotte Chilsung vs. AptaBio Therapeutics | Lotte Chilsung vs. Daewoo SBI SPAC | Lotte Chilsung vs. Dream Security co | Lotte Chilsung vs. Microfriend |
| Seoul Electronics vs. Samsung Electronics Co | Seoul Electronics vs. Samsung Electronics Co | Seoul Electronics vs. Hyundai Motor Co | Seoul Electronics vs. Hyundai Motor |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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