Correlation Between Korea Petro and Lotte Rental
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Lotte Rental 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 Korea Petro and Lotte Rental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Petro Chemical and Lotte Rental Co, you can compare the effects of market volatilities on Korea Petro and Lotte Rental 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 Korea Petro with a short position of Lotte Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Lotte Rental.
Diversification Opportunities for Korea Petro and Lotte Rental
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korea and Lotte is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Lotte Rental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Rental and Korea Petro 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 Korea Petro Chemical are associated (or correlated) with Lotte Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Rental has no effect on the direction of Korea Petro i.e., Korea Petro and Lotte Rental go up and down completely randomly.
Pair Corralation between Korea Petro and Lotte Rental
Assuming the 90 days trading horizon Korea Petro Chemical is expected to generate 2.07 times more return on investment than Lotte Rental. However, Korea Petro is 2.07 times more volatile than Lotte Rental Co. It trades about 0.12 of its potential returns per unit of risk. Lotte Rental Co is currently generating about -0.23 per unit of risk. If you would invest 8,370,000 in Korea Petro Chemical on November 7, 2024 and sell it today you would earn a total of 470,000 from holding Korea Petro Chemical or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Korea Petro Chemical vs. Lotte Rental Co
Performance |
| Timeline |
| Korea Petro Chemical |
| Lotte Rental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Korea Petro and Lotte Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Lotte Rental
The main advantage of trading using opposite Korea Petro and Lotte Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Lotte Rental 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 Rental will offset losses from the drop in Lotte Rental's long position.| Korea Petro vs. Tamul Multimedia Co | Korea Petro vs. Dongwoon Anatech Co | Korea Petro vs. Wonbang Tech Co | Korea Petro vs. Kaonmedia Co |
| Lotte Rental vs. Polaris Office Corp | Lotte Rental vs. Dongbang Transport Logistics | Lotte Rental vs. Ilji Technology Co | Lotte Rental vs. People Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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