Correlation Between Lotte Chilsung and Daesung Hi
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Daesung Hi 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 Daesung Hi 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 Daesung Hi Tech Co, you can compare the effects of market volatilities on Lotte Chilsung and Daesung Hi 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 Daesung Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Daesung Hi.
Diversification Opportunities for Lotte Chilsung and Daesung Hi
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Daesung is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech 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 Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Daesung Hi go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Daesung Hi
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.47 times more return on investment than Daesung Hi. However, Lotte Chilsung Beverage is 2.13 times less risky than Daesung Hi. It trades about -0.03 of its potential returns per unit of risk. Daesung Hi Tech Co is currently generating about -0.07 per unit of risk. If you would invest 12,480,000 in Lotte Chilsung Beverage on October 14, 2024 and sell it today you would lose (1,470,000) from holding Lotte Chilsung Beverage or give up 11.78% 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. Daesung Hi Tech Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Daesung Hi Tech |
Lotte Chilsung and Daesung Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Daesung Hi
The main advantage of trading using opposite Lotte Chilsung and Daesung Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Daesung Hi 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 Daesung Hi will offset losses from the drop in Daesung Hi's long position.| Lotte Chilsung vs. System and Application | Lotte Chilsung vs. Hanshin Construction Co | Lotte Chilsung vs. Dongbang Transport Logistics | Lotte Chilsung vs. Daou Data Corp |
| Daesung Hi vs. DONGKUK TED METAL | Daesung Hi vs. Eugene Technology CoLtd | Daesung Hi vs. Seers Technology | Daesung Hi vs. iNtRON Biotechnology |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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