Correlation Between Lotte Chilsung and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and Shinhan Inverse 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 Shinhan Inverse 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 Shinhan Inverse Silver, you can compare the effects of market volatilities on Lotte Chilsung and Shinhan Inverse 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 Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and Shinhan Inverse.
Diversification Opportunities for Lotte Chilsung and Shinhan Inverse
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Shinhan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and Shinhan Inverse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Silver 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 Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse Silver has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and Shinhan Inverse go up and down completely randomly.
Pair Corralation between Lotte Chilsung and Shinhan Inverse
Assuming the 90 days trading horizon Lotte Chilsung is expected to generate 10.18 times less return on investment than Shinhan Inverse. But when comparing it to its historical volatility, Lotte Chilsung Beverage is 1.06 times less risky than Shinhan Inverse. It trades about 0.02 of its potential returns per unit of risk. Shinhan Inverse Silver is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 334,000 in Shinhan Inverse Silver on September 2, 2024 and sell it today you would earn a total of 21,500 from holding Shinhan Inverse Silver or generate 6.44% 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. Shinhan Inverse Silver
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| Shinhan Inverse Silver |
Lotte Chilsung and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and Shinhan Inverse
The main advantage of trading using opposite Lotte Chilsung and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, Shinhan Inverse 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 Shinhan Inverse will offset losses from the drop in Shinhan Inverse's long position.| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech Co |
| Shinhan Inverse vs. AptaBio Therapeutics | Shinhan Inverse vs. Daewoo SBI SPAC | Shinhan Inverse vs. Dream Security co | Shinhan Inverse vs. Microfriend |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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