Correlation Between Lotte Chilsung and Nice Information
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Nice Information 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 Nice Information 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 Nice Information Telecommunication, you can compare the effects of market volatilities on Lotte Chilsung and Nice Information 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 Nice Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Nice Information.
Diversification Opportunities for Lotte Chilsung and Nice Information
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Nice is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Nice Information Telecommunica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Information Tel 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 Nice Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Information Tel has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Nice Information go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Nice Information
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 1.66 times more return on investment than Nice Information. However, Lotte Chilsung is 1.66 times more volatile than Nice Information Telecommunication. It trades about -0.02 of its potential returns per unit of risk. Nice Information Telecommunication is currently generating about -0.13 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Nice Information Telecommunica
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Nice Information Tel |
Lotte Chilsung and Nice Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Nice Information
The main advantage of trading using opposite Lotte Chilsung and Nice Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Nice Information 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 Nice Information will offset losses from the drop in Nice Information'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 |
| Nice Information vs. Dongsin Engineering Construction | Nice Information vs. Doosan Fuel Cell | Nice Information vs. Daishin Balance 1 | Nice Information vs. Total Soft Bank |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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