Correlation Between Lotte Chilsung and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Hana Financial 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 Hana Financial 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 Hana Financial, you can compare the effects of market volatilities on Lotte Chilsung and Hana Financial 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 Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Hana Financial.
Diversification Opportunities for Lotte Chilsung and Hana Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Hana is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 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 Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Hana Financial go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Hana Financial
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Hana Financial. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.3 times less risky than Hana Financial. The stock trades about -0.04 of its potential returns per unit of risk. The Hana Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,726,489 in Hana Financial on October 16, 2024 and sell it today you would earn a total of 1,133,511 from holding Hana Financial or generate 23.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Hana Financial
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Hana Financial |
Lotte Chilsung and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Hana Financial
The main advantage of trading using opposite Lotte Chilsung and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Hana Financial 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 Hana Financial will offset losses from the drop in Hana Financial's long position.| Lotte Chilsung vs. Sungchang Autotech Co | Lotte Chilsung vs. KMH Hitech Co | Lotte Chilsung vs. Daishin Information Communications | Lotte Chilsung vs. Eagle Veterinary Technology |
| Hana Financial vs. Korea Air Svc | Hana Financial vs. Lotte Chilsung Beverage | Hana Financial vs. GS Retail Co | Hana Financial vs. Kisan Telecom 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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