Correlation Between Lotte Chilsung and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on Lotte Chilsung and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and TOPMATERIAL.
Diversification Opportunities for Lotte Chilsung and TOPMATERIAL
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and TOPMATERIAL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Lotte Chilsung and TOPMATERIAL
Assuming the 90 days trading horizon Lotte Chilsung is expected to generate 11.53 times less return on investment than TOPMATERIAL. But when comparing it to its historical volatility, Lotte Chilsung Beverage is 6.27 times less risky than TOPMATERIAL. It trades about 0.11 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,660,000 in TOPMATERIAL LTD on November 28, 2024 and sell it today you would earn a total of 820,000 from holding TOPMATERIAL LTD or generate 30.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. TOPMATERIAL LTD
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| TOPMATERIAL LTD |
Lotte Chilsung and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and TOPMATERIAL
The main advantage of trading using opposite Lotte Chilsung and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's long position.| Lotte Chilsung vs. Heungkuk Metaltech CoLtd | Lotte Chilsung vs. Fine Besteel Co | Lotte Chilsung vs. Duksan Hi Metal | Lotte Chilsung vs. Husteel |
| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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