Correlation Between Lotte Chilsung and Koryo Credit
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Koryo Credit 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 Koryo Credit 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 Koryo Credit Information, you can compare the effects of market volatilities on Lotte Chilsung and Koryo Credit 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 Koryo Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Koryo Credit.
Diversification Opportunities for Lotte Chilsung and Koryo Credit
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Koryo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Koryo Credit Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koryo Credit 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 Koryo Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koryo Credit Information has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Koryo Credit go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Koryo Credit
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Koryo Credit. In addition to that, Lotte Chilsung is 1.48 times more volatile than Koryo Credit Information. It trades about -0.02 of its total potential returns per unit of risk. Koryo Credit Information is currently generating about 0.24 per unit of volatility. If you would invest 970,000 in Koryo Credit Information on September 1, 2024 and sell it today you would earn a total of 61,000 from holding Koryo Credit Information or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Koryo Credit Information
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Koryo Credit Information |
Lotte Chilsung and Koryo Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Koryo Credit
The main advantage of trading using opposite Lotte Chilsung and Koryo Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Koryo Credit 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 Koryo Credit will offset losses from the drop in Koryo Credit'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 |
| Koryo Credit vs. Hanwha InvestmentSecurities Co | Koryo Credit vs. Hyundai Home Shopping | Koryo Credit vs. SBI Investment KOREA | Koryo Credit vs. Cuckoo Homesys Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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