Correlation Between Lotte Chilsung and Korea Information
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Korea 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 Korea 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 Korea Information Engineering, you can compare the effects of market volatilities on Lotte Chilsung and Korea 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Korea Information.
Diversification Opportunities for Lotte Chilsung and Korea Information
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Korea is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Korea Information go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Korea Information
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Korea Information. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.36 times less risky than Korea Information. The stock trades about -0.06 of its potential returns per unit of risk. The Korea Information Engineering is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 261,500 in Korea Information Engineering on September 13, 2024 and sell it today you would earn a total of 13,500 from holding Korea Information Engineering or generate 5.16% 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. Korea Information Engineering
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Korea Information |
Lotte Chilsung and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Korea Information
The main advantage of trading using opposite Lotte Chilsung and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Korea 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 Korea Information will offset losses from the drop in Korea Information's long position.| Lotte Chilsung vs. Korea New Network | Lotte Chilsung vs. ICD Co | Lotte Chilsung vs. DYPNF CoLtd | Lotte Chilsung vs. Solution Advanced Technology |
| Korea Information vs. Cube Entertainment | Korea Information vs. Dreamus Company | Korea Information vs. LG Energy Solution | Korea Information vs. Dongwon System |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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