Correlation Between Lotte Chilsung and SP Systems
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and SP Systems 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 SP Systems 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 SP Systems CoLtd, you can compare the effects of market volatilities on Lotte Chilsung and SP Systems 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 SP Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and SP Systems.
Diversification Opportunities for Lotte Chilsung and SP Systems
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and 317830 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and SP Systems CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Systems CoLtd 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 SP Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Systems CoLtd has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and SP Systems go up and down completely randomly.
Pair Corralation between Lotte Chilsung and SP Systems
Assuming the 90 days trading horizon Lotte Chilsung is expected to generate 60.69 times less return on investment than SP Systems. But when comparing it to its historical volatility, Lotte Chilsung Beverage is 5.59 times less risky than SP Systems. It trades about 0.03 of its potential returns per unit of risk. SP Systems CoLtd is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 707,000 in SP Systems CoLtd on November 22, 2024 and sell it today you would earn a total of 305,000 from holding SP Systems CoLtd or generate 43.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. SP Systems CoLtd
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| SP Systems CoLtd |
Lotte Chilsung and SP Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and SP Systems
The main advantage of trading using opposite Lotte Chilsung and SP Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, SP Systems 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 SP Systems will offset losses from the drop in SP Systems' long position.| Lotte Chilsung vs. Korea Shipbuilding Offshore | Lotte Chilsung vs. Coloray International Investment | Lotte Chilsung vs. Golden Bridge Investment | Lotte Chilsung vs. SBI Investment KOREA |
| SP Systems vs. Digital Power Communications | SP Systems vs. Jeju Beer Co | SP Systems vs. Nature and Environment | SP Systems vs. Samlip General Foods |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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