Correlation Between Lotte Chilsung and Sejong Industrial
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Sejong Industrial 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 Sejong Industrial 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 Sejong Industrial, you can compare the effects of market volatilities on Lotte Chilsung and Sejong Industrial 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 Sejong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Sejong Industrial.
Diversification Opportunities for Lotte Chilsung and Sejong Industrial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Sejong is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Sejong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Industrial 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 Sejong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Industrial has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Sejong Industrial go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Sejong Industrial
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Sejong Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.46 times less risky than Sejong Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Sejong Industrial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 573,913 in Sejong Industrial on September 2, 2024 and sell it today you would lose (158,913) from holding Sejong Industrial or give up 27.69% 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. Sejong Industrial
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Sejong Industrial |
Lotte Chilsung and Sejong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Sejong Industrial
The main advantage of trading using opposite Lotte Chilsung and Sejong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Sejong Industrial 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 Sejong Industrial will offset losses from the drop in Sejong Industrial's long position.| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech Co |
| Sejong Industrial vs. LG Display | Sejong Industrial vs. Hyundai Motor Co | Sejong Industrial vs. Hyundai Motor Co | Sejong Industrial vs. Adaptive Plasma Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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