Correlation Between Lotte Chilsung and BIT Computer
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and BIT Computer 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 BIT Computer 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 BIT Computer Co, you can compare the effects of market volatilities on Lotte Chilsung and BIT Computer 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 BIT Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and BIT Computer.
Diversification Opportunities for Lotte Chilsung and BIT Computer
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and BIT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer 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 BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and BIT Computer go up and down completely randomly.
Pair Corralation between Lotte Chilsung and BIT Computer
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.77 times more return on investment than BIT Computer. However, Lotte Chilsung Beverage is 1.3 times less risky than BIT Computer. It trades about -0.02 of its potential returns per unit of risk. BIT Computer Co is currently generating about -0.05 per unit of risk. If you would invest 12,930,000 in Lotte Chilsung Beverage on September 1, 2024 and sell it today you would lose (850,000) from holding Lotte Chilsung Beverage or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. BIT Computer Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| BIT Computer |
Lotte Chilsung and BIT Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and BIT Computer
The main advantage of trading using opposite Lotte Chilsung and BIT Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, BIT Computer 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 BIT Computer will offset losses from the drop in BIT Computer'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 |
| BIT Computer vs. AptaBio Therapeutics | BIT Computer vs. KT Hitel | BIT Computer vs. SillaJen | BIT Computer vs. Cytogen |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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