Correlation Between Samsung Electronics and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Lotte Reit 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 Samsung Electronics and Lotte Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Lotte Reit Co, you can compare the effects of market volatilities on Samsung Electronics and Lotte Reit 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 Samsung Electronics with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Lotte Reit.
Diversification Opportunities for Samsung Electronics and Lotte Reit
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Lotte is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Lotte Reit go up and down completely randomly.
Pair Corralation between Samsung Electronics and Lotte Reit
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Lotte Reit. In addition to that, Samsung Electronics is 1.26 times more volatile than Lotte Reit Co. It trades about -0.04 of its total potential returns per unit of risk. Lotte Reit Co is currently generating about -0.01 per unit of volatility. If you would invest 340,042 in Lotte Reit Co on September 12, 2024 and sell it today you would lose (31,542) from holding Lotte Reit Co or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.71% |
| Values | Daily Returns |
Samsung Electronics Co vs. Lotte Reit Co
Performance |
| Timeline |
| Samsung Electronics |
| Lotte Reit |
Samsung Electronics and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Lotte Reit
The main advantage of trading using opposite Samsung Electronics and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Lotte Reit 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 Lotte Reit will offset losses from the drop in Lotte Reit's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
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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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