Correlation Between Lotte Chilsung and Nature
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Nature 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 Nature 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 Nature and Environment, you can compare the effects of market volatilities on Lotte Chilsung and Nature 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 Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Nature.
Diversification Opportunities for Lotte Chilsung and Nature
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Nature is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment 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 Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Nature go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Nature
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.69 times more return on investment than Nature. However, Lotte Chilsung Beverage is 1.45 times less risky than Nature. It trades about -0.06 of its potential returns per unit of risk. Nature and Environment is currently generating about -0.09 per unit of risk. If you would invest 15,140,000 in Lotte Chilsung Beverage on September 12, 2024 and sell it today you would lose (3,510,000) from holding Lotte Chilsung Beverage or give up 23.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Nature and Environment
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Nature and Environment |
Lotte Chilsung and Nature Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Nature
The main advantage of trading using opposite Lotte Chilsung and Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Nature 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 Nature will offset losses from the drop in Nature's long position.| Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. LG Energy Solution | Lotte Chilsung vs. SK Hynix |
| Nature vs. LG Household Healthcare | Nature vs. INFINITT Healthcare Co | Nature vs. Samsung Publishing Co | Nature 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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