Correlation Between Lotte Chilsung and Hyundai Industrial
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Hyundai Industrial 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 Hyundai Industrial 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 Hyundai Industrial Co, you can compare the effects of market volatilities on Lotte Chilsung and Hyundai Industrial 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 Hyundai Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Hyundai Industrial.
Diversification Opportunities for Lotte Chilsung and Hyundai Industrial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Hyundai is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai 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 Hyundai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Hyundai Industrial go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Hyundai Industrial
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Hyundai Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.6 times less risky than Hyundai Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Hyundai Industrial Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 654,344 in Hyundai Industrial Co on August 29, 2024 and sell it today you would lose (136,344) from holding Hyundai Industrial Co or give up 20.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Hyundai Industrial Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Hyundai Industrial |
Lotte Chilsung and Hyundai Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Hyundai Industrial
The main advantage of trading using opposite Lotte Chilsung and Hyundai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Hyundai Industrial 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 Hyundai Industrial will offset losses from the drop in Hyundai Industrial's long position.| Lotte Chilsung vs. Stic Investments | Lotte Chilsung vs. Heungkuk Metaltech CoLtd | Lotte Chilsung vs. Pureun Mutual Savings | Lotte Chilsung vs. Dongbang Transport Logistics |
| Hyundai Industrial vs. Busan Industrial Co | Hyundai Industrial vs. Busan Ind | Hyundai Industrial vs. Mirae Asset Daewoo | Hyundai Industrial vs. UNISEM 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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