Correlation Between Samsung Heavy and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Samsung Heavy and Lotte Data 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 Heavy and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Heavy Industries and Lotte Data Communication, you can compare the effects of market volatilities on Samsung Heavy and Lotte Data 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 Heavy with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Heavy and Lotte Data.
Diversification Opportunities for Samsung Heavy and Lotte Data
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Samsung and Lotte is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Heavy Industries and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Samsung Heavy 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 Heavy Industries are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Samsung Heavy i.e., Samsung Heavy and Lotte Data go up and down completely randomly.
Pair Corralation between Samsung Heavy and Lotte Data
Assuming the 90 days trading horizon Samsung Heavy Industries is expected to generate 1.12 times more return on investment than Lotte Data. However, Samsung Heavy is 1.12 times more volatile than Lotte Data Communication. It trades about 0.32 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of risk. If you would invest 975,000 in Samsung Heavy Industries on August 30, 2024 and sell it today you would earn a total of 215,000 from holding Samsung Heavy Industries or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Samsung Heavy Industries vs. Lotte Data Communication
Performance |
| Timeline |
| Samsung Heavy Industries |
| Lotte Data Communication |
Samsung Heavy and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Heavy and Lotte Data
The main advantage of trading using opposite Samsung Heavy and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Heavy position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Samsung Heavy vs. Samyang Foods Co | Samsung Heavy vs. BGF Retail Co | Samsung Heavy vs. RF Materials Co | Samsung Heavy vs. Daiyang Metal Co |
| Lotte Data vs. Ssangyong Information Communication | Lotte Data vs. FNSTech Co | Lotte Data vs. Daishin Information Communications | Lotte Data vs. Innowireless Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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