Correlation Between Lotte Chilsung and Pyung Hwa
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Pyung Hwa 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 Pyung Hwa 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 Pyung Hwa Industrial, you can compare the effects of market volatilities on Lotte Chilsung and Pyung Hwa 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 Pyung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Pyung Hwa.
Diversification Opportunities for Lotte Chilsung and Pyung Hwa
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Pyung is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Pyung Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyung Hwa Industrial 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 Pyung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyung Hwa Industrial has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Pyung Hwa go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Pyung Hwa
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Pyung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.25 times less risky than Pyung Hwa. The stock trades about -0.18 of its potential returns per unit of risk. The Pyung Hwa Industrial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 100,400 in Pyung Hwa Industrial on October 18, 2024 and sell it today you would lose (5,200) from holding Pyung Hwa Industrial or give up 5.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Pyung Hwa Industrial
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Pyung Hwa Industrial |
Lotte Chilsung and Pyung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Pyung Hwa
The main advantage of trading using opposite Lotte Chilsung and Pyung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Pyung Hwa 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 Pyung Hwa will offset losses from the drop in Pyung Hwa's long position.| Lotte Chilsung vs. Jeju Air Co | Lotte Chilsung vs. CU Medical Systems | Lotte Chilsung vs. Youl Chon Chemical | Lotte Chilsung vs. Cloud Air CoLtd |
| Pyung Hwa vs. Korea Electronic Certification | Pyung Hwa vs. Lotte Chilsung Beverage | Pyung Hwa vs. Vissem Electronics Co | Pyung Hwa vs. Hankukpackage 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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