Correlation Between Lotte Chilsung and Hana Technology
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Hana Technology 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 Hana Technology 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 Hana Technology Co, you can compare the effects of market volatilities on Lotte Chilsung and Hana Technology 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 Hana Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Hana Technology.
Diversification Opportunities for Lotte Chilsung and Hana Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and Hana is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Hana Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Technology 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 Hana Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Technology has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Hana Technology go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Hana Technology
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.37 times more return on investment than Hana Technology. However, Lotte Chilsung Beverage is 2.7 times less risky than Hana Technology. It trades about -0.05 of its potential returns per unit of risk. Hana Technology Co is currently generating about -0.07 per unit of risk. If you would invest 12,790,000 in Lotte Chilsung Beverage on November 3, 2024 and sell it today you would lose (2,440,000) from holding Lotte Chilsung Beverage or give up 19.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Hana Technology Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Hana Technology |
Lotte Chilsung and Hana Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Hana Technology
The main advantage of trading using opposite Lotte Chilsung and Hana Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Hana Technology 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 Hana Technology will offset losses from the drop in Hana Technology's long position.| Lotte Chilsung vs. Seoyon Topmetal Co | Lotte Chilsung vs. Kyeryong Construction Industrial | Lotte Chilsung vs. Kbi Metal Co | Lotte Chilsung vs. PJ Metal Co |
| Hana Technology vs. Youngchang Chemical Co | Hana Technology vs. Dongnam Chemical Co | Hana Technology vs. Lotte Fine Chemical | Hana Technology vs. Kukdong Oil Chemicals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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