Correlation Between Lotte Chilsung and Samil CoLtd
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Samil CoLtd 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 Samil CoLtd 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 Samil CoLtd, you can compare the effects of market volatilities on Lotte Chilsung and Samil CoLtd 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 Samil CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Samil CoLtd.
Diversification Opportunities for Lotte Chilsung and Samil CoLtd
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Samil is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Samil CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samil 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 Samil CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samil CoLtd has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Samil CoLtd go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Samil CoLtd
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.98 times more return on investment than Samil CoLtd. However, Lotte Chilsung Beverage is 1.02 times less risky than Samil CoLtd. It trades about -0.02 of its potential returns per unit of risk. Samil CoLtd is currently generating about -0.05 per unit of risk. If you would invest 12,850,000 in Lotte Chilsung Beverage on September 5, 2024 and sell it today you would lose (810,000) from holding Lotte Chilsung Beverage or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.18% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Samil CoLtd
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Samil CoLtd |
Lotte Chilsung and Samil CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Samil CoLtd
The main advantage of trading using opposite Lotte Chilsung and Samil CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Samil CoLtd 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 Samil CoLtd will offset losses from the drop in Samil CoLtd's long position.| Lotte Chilsung vs. Hankook Steel Co | Lotte Chilsung vs. Seah Steel Corp | Lotte Chilsung vs. Genie Music | Lotte Chilsung vs. Hanil Iron Steel |
| Samil CoLtd vs. Nice Information Telecommunication | Samil CoLtd vs. LG Household Healthcare | Samil CoLtd vs. Visang Education | Samil CoLtd vs. Lotte Chilsung Beverage |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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