Correlation Between Lotte Chilsung and Tway Air
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Tway Air 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 Tway Air 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 Tway Air Co, you can compare the effects of market volatilities on Lotte Chilsung and Tway Air 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 Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Tway Air.
Diversification Opportunities for Lotte Chilsung and Tway Air
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Tway is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air 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 Tway Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tway Air has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Tway Air go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Tway Air
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.23 times more return on investment than Tway Air. However, Lotte Chilsung Beverage is 4.31 times less risky than Tway Air. It trades about 0.16 of its potential returns per unit of risk. Tway Air Co is currently generating about -0.34 per unit of risk. If you would invest 10,350,000 in Lotte Chilsung Beverage on November 27, 2024 and sell it today you would earn a total of 380,000 from holding Lotte Chilsung Beverage or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Tway Air Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Tway Air |
Lotte Chilsung and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Tway Air
The main advantage of trading using opposite Lotte Chilsung and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Tway Air 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 Tway Air will offset losses from the drop in Tway Air's long position.| Lotte Chilsung vs. KB Financial Group | Lotte Chilsung vs. Shinhan Financial Group | Lotte Chilsung vs. Hyundai Motor | Lotte Chilsung vs. Hyundai Motor Co |
| Tway Air vs. Jahwa Electronics Co | Tway Air vs. Daeduck Electronics Co | Tway Air vs. SungMoon Electronics Co | Tway Air vs. Samyoung Electronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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