Correlation Between Heungkuk Metaltech and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech and Lotte Non 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 Heungkuk Metaltech and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and Lotte Non Life Insurance, you can compare the effects of market volatilities on Heungkuk Metaltech and Lotte Non 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 Heungkuk Metaltech with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and Lotte Non.
Diversification Opportunities for Heungkuk Metaltech and Lotte Non
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Heungkuk and Lotte is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with Lotte Non. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Lotte Non go up and down completely randomly.
Pair Corralation between Heungkuk Metaltech and Lotte Non
Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 0.43 times more return on investment than Lotte Non. However, Heungkuk Metaltech CoLtd is 2.33 times less risky than Lotte Non. It trades about -0.06 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about -0.1 per unit of risk. If you would invest 552,000 in Heungkuk Metaltech CoLtd on September 3, 2024 and sell it today you would lose (72,000) from holding Heungkuk Metaltech CoLtd or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heungkuk Metaltech CoLtd vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Heungkuk Metaltech CoLtd |
| Lotte Non Life |
Heungkuk Metaltech and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heungkuk Metaltech and Lotte Non
The main advantage of trading using opposite Heungkuk Metaltech and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heungkuk Metaltech position performs unexpectedly, Lotte Non 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 Non will offset losses from the drop in Lotte Non's long position.| Heungkuk Metaltech vs. Daewoo Engineering Construction | Heungkuk Metaltech vs. DataSolution | Heungkuk Metaltech vs. Seohee Construction Co | Heungkuk Metaltech vs. Air Busan Co |
| Lotte Non vs. Seoyon Topmetal Co | Lotte Non vs. Coloray International Investment | Lotte Non vs. Daejung Chemicals Metals | Lotte Non vs. Daol Investment Securities |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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