Correlation Between Lotte Chilsung and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Dongil Metal 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 Dongil Metal 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 Dongil Metal Co, you can compare the effects of market volatilities on Lotte Chilsung and Dongil Metal 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 Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Dongil Metal.
Diversification Opportunities for Lotte Chilsung and Dongil Metal
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Dongil is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Dongil Metal go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Dongil Metal
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 2.58 times more return on investment than Dongil Metal. However, Lotte Chilsung is 2.58 times more volatile than Dongil Metal Co. It trades about -0.02 of its potential returns per unit of risk. Dongil Metal Co is currently generating about -0.22 per unit of risk. If you would invest 12,200,000 in Lotte Chilsung Beverage on September 1, 2024 and sell it today you would lose (120,000) from holding Lotte Chilsung Beverage or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Dongil Metal Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Dongil Metal |
Lotte Chilsung and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Dongil Metal
The main advantage of trading using opposite Lotte Chilsung and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Dongil Metal 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 Dongil Metal will offset losses from the drop in Dongil Metal'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 |
| Dongil Metal vs. Konan Technology | Dongil Metal vs. Daedong Steel Co | Dongil Metal vs. Kakao Games Corp | Dongil Metal vs. KG Eco Technology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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