Correlation Between Lotte Chilsung and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Phoenix Materials 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 Phoenix Materials 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 Phoenix Materials Co, you can compare the effects of market volatilities on Lotte Chilsung and Phoenix Materials 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 Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Phoenix Materials.
Diversification Opportunities for Lotte Chilsung and Phoenix Materials
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Phoenix is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials 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 Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Phoenix Materials go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Phoenix Materials
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.37 times more return on investment than Phoenix Materials. However, Lotte Chilsung Beverage is 2.69 times less risky than Phoenix Materials. It trades about -0.05 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.03 per unit of risk. If you would invest 15,050,000 in Lotte Chilsung Beverage on September 3, 2024 and sell it today you would lose (3,090,000) from holding Lotte Chilsung Beverage or give up 20.53% 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. Phoenix Materials Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Phoenix Materials |
Lotte Chilsung and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Phoenix Materials
The main advantage of trading using opposite Lotte Chilsung and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.| Lotte Chilsung vs. LG Display | Lotte Chilsung vs. Hyundai Motor | Lotte Chilsung vs. Hyundai Motor Co | Lotte Chilsung vs. Hyundai Motor Co |
| Phoenix Materials vs. Pan Entertainment Co | Phoenix Materials vs. Jeong Moon Information | Phoenix Materials vs. Digital Multimedia Technology | Phoenix Materials vs. Lotte Data Communication |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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