Correlation Between Lotte Chilsung and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Solution Advanced 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 Solution Advanced 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 Solution Advanced Technology, you can compare the effects of market volatilities on Lotte Chilsung and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Solution Advanced.
Diversification Opportunities for Lotte Chilsung and Solution Advanced
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Solution is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Solution Advanced go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Solution Advanced
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the Solution Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 2.29 times less risky than Solution Advanced. The stock trades about -0.34 of its potential returns per unit of risk. The Solution Advanced Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 131,200 in Solution Advanced Technology on October 31, 2024 and sell it today you would earn a total of 18,600 from holding Solution Advanced Technology or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. Solution Advanced Technology
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Solution Advanced |
Lotte Chilsung and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Solution Advanced
The main advantage of trading using opposite Lotte Chilsung and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| Lotte Chilsung vs. Haitai Confectionery Foods | Lotte Chilsung vs. Kukdong Oil Chemicals | Lotte Chilsung vs. Sam Yang Foods | Lotte Chilsung vs. DoubleU Games Co |
| Solution Advanced vs. Ssangyong Information Communication | Solution Advanced vs. Nice Information Telecommunication | Solution Advanced vs. CG Hi Tech | Solution Advanced vs. Sangsin Energy Display |
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 CEOs Directory module to screen CEOs from public companies around the world.
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