Correlation Between Samsung SDI and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Samsung SDI 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 SDI 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 SDI and Lotte Reit Co, you can compare the effects of market volatilities on Samsung SDI 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 SDI with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Lotte Reit.
Diversification Opportunities for Samsung SDI and Lotte Reit
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Lotte is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI 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 SDI 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 SDI 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 SDI i.e., Samsung SDI and Lotte Reit go up and down completely randomly.
Pair Corralation between Samsung SDI and Lotte Reit
Assuming the 90 days trading horizon Samsung SDI is expected to under-perform the Lotte Reit. In addition to that, Samsung SDI is 1.76 times more volatile than Lotte Reit Co. It trades about -0.11 of its total potential returns per unit of risk. Lotte Reit Co is currently generating about -0.08 per unit of volatility. If you would invest 322,000 in Lotte Reit Co on September 12, 2024 and sell it today you would lose (13,500) from holding Lotte Reit Co or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung SDI vs. Lotte Reit Co
Performance |
| Timeline |
| Samsung SDI |
| Lotte Reit |
Samsung SDI and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung SDI and Lotte Reit
The main advantage of trading using opposite Samsung SDI and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI 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 SDI vs. Hanshin Construction Co | Samsung SDI vs. Camus Engineering Construction | Samsung SDI vs. Polaris Office Corp | Samsung SDI vs. Hyundai Engineering Construction |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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