Correlation Between Lotte Chilsung and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical, you can compare the effects of market volatilities on Lotte Chilsung and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Miwon Chemical.
Diversification Opportunities for Lotte Chilsung and Miwon Chemical
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Miwon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Miwon Chemical go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Miwon Chemical
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Miwon Chemical. In addition to that, Lotte Chilsung is 2.19 times more volatile than Miwon Chemical. It trades about -0.07 of its total potential returns per unit of risk. Miwon Chemical is currently generating about -0.05 per unit of volatility. If you would invest 8,010,000 in Miwon Chemical on September 2, 2024 and sell it today you would lose (160,000) from holding Miwon Chemical or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Miwon Chemical
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Miwon Chemical |
Lotte Chilsung and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Miwon Chemical
The main advantage of trading using opposite Lotte Chilsung and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech Co |
| Miwon Chemical vs. Kukdo Chemical Co | Miwon Chemical vs. Youl Chon Chemical | Miwon Chemical vs. Kyung In Synthetic Corp | Miwon Chemical vs. Daeduck 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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