Correlation Between Myoung Shin and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Myoung Shin and Lotte Chilsung 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 Myoung Shin and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Myoung Shin Industrial and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Myoung Shin and Lotte Chilsung 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 Myoung Shin with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Myoung Shin and Lotte Chilsung.
Diversification Opportunities for Myoung Shin and Lotte Chilsung
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Myoung and Lotte is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Myoung Shin Industrial and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Myoung Shin 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 Myoung Shin Industrial are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Myoung Shin i.e., Myoung Shin and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Myoung Shin and Lotte Chilsung
Assuming the 90 days trading horizon Myoung Shin Industrial is expected to generate 1.6 times more return on investment than Lotte Chilsung. However, Myoung Shin is 1.6 times more volatile than Lotte Chilsung Beverage. It trades about -0.01 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.03 per unit of risk. If you would invest 1,639,443 in Myoung Shin Industrial on August 29, 2024 and sell it today you would lose (420,443) from holding Myoung Shin Industrial or give up 25.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Myoung Shin Industrial vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Myoung Shin Industrial |
| Lotte Chilsung Beverage |
Myoung Shin and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Myoung Shin and Lotte Chilsung
The main advantage of trading using opposite Myoung Shin and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Myoung Shin position performs unexpectedly, Lotte Chilsung 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 Chilsung will offset losses from the drop in Lotte Chilsung's long position.| Myoung Shin vs. Sungwoo Electronics Co | Myoung Shin vs. Samwha Electronics Co | Myoung Shin vs. Namhwa Industrial Co | Myoung Shin vs. Kbi Metal Co |
| Lotte Chilsung vs. Stic Investments | Lotte Chilsung vs. Heungkuk Metaltech CoLtd | Lotte Chilsung vs. Pureun Mutual Savings | Lotte Chilsung vs. Dongbang Transport Logistics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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