Correlation Between Tae Kyung and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Lotte Fine 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 Tae Kyung and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and Lotte Fine Chemical, you can compare the effects of market volatilities on Tae Kyung and Lotte Fine 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 Tae Kyung with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Lotte Fine.
Diversification Opportunities for Tae Kyung and Lotte Fine
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tae and Lotte is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Tae Kyung i.e., Tae Kyung and Lotte Fine go up and down completely randomly.
Pair Corralation between Tae Kyung and Lotte Fine
Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 1.0 times more return on investment than Lotte Fine. However, Tae Kyung Chemical is 1.0 times less risky than Lotte Fine. It trades about 0.0 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about -0.02 per unit of risk. If you would invest 1,261,148 in Tae Kyung Chemical on November 19, 2024 and sell it today you would lose (84,148) from holding Tae Kyung Chemical or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. Lotte Fine Chemical
Performance |
| Timeline |
| Tae Kyung Chemical |
| Lotte Fine Chemical |
Tae Kyung and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and Lotte Fine
The main advantage of trading using opposite Tae Kyung and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung position performs unexpectedly, Lotte Fine 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 Fine will offset losses from the drop in Lotte Fine's long position.| Tae Kyung vs. KPX Green Chemical | Tae Kyung vs. Jahwa Electronics Co | Tae Kyung vs. Hanil Chemical Ind | Tae Kyung vs. Lotte Chilsung Beverage |
| Lotte Fine vs. Coloray International Investment | Lotte Fine vs. Hanwha Life Insurance | Lotte Fine vs. Sangsangin Investment Securities | Lotte Fine vs. Hana Financial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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