Correlation Between Lotte Chilsung and Humax Holdings
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Humax Holdings 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 Humax Holdings 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 Humax Holdings Co, you can compare the effects of market volatilities on Lotte Chilsung and Humax Holdings 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 Humax Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Humax Holdings.
Diversification Opportunities for Lotte Chilsung and Humax Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Humax is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Humax Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax Holdings 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 Humax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax Holdings has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Humax Holdings go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Humax Holdings
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.43 times more return on investment than Humax Holdings. However, Lotte Chilsung Beverage is 2.31 times less risky than Humax Holdings. It trades about 0.24 of its potential returns per unit of risk. Humax Holdings Co is currently generating about -0.46 per unit of risk. If you would invest 10,940,000 in Lotte Chilsung Beverage on September 14, 2024 and sell it today you would earn a total of 1,090,000 from holding Lotte Chilsung Beverage or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Humax Holdings Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Humax Holdings |
Lotte Chilsung and Humax Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Humax Holdings
The main advantage of trading using opposite Lotte Chilsung and Humax Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Humax Holdings 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 Humax Holdings will offset losses from the drop in Humax Holdings' long position.| Lotte Chilsung vs. Korea New Network | Lotte Chilsung vs. ICD Co | Lotte Chilsung vs. DYPNF CoLtd | Lotte Chilsung vs. Solution Advanced Technology |
| Humax Holdings vs. Seoul Food Industrial | Humax Holdings vs. ABCO Electronics Co | Humax Holdings vs. Lotte Chilsung Beverage | Humax Holdings vs. CKH Food Health |
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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