Correlation Between Sungmoon Electronics and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Sungmoon Electronics 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 Sungmoon Electronics and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungmoon Electronics Co and Lotte Fine Chemical, you can compare the effects of market volatilities on Sungmoon Electronics 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 Sungmoon Electronics with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungmoon Electronics and Lotte Fine.
Diversification Opportunities for Sungmoon Electronics and Lotte Fine
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sungmoon and Lotte is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sungmoon Electronics Co 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 Sungmoon Electronics 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 Sungmoon Electronics Co 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 Sungmoon Electronics i.e., Sungmoon Electronics and Lotte Fine go up and down completely randomly.
Pair Corralation between Sungmoon Electronics and Lotte Fine
Assuming the 90 days trading horizon Sungmoon Electronics Co is expected to generate 1.83 times more return on investment than Lotte Fine. However, Sungmoon Electronics is 1.83 times more volatile than Lotte Fine Chemical. It trades about 0.0 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about -0.08 per unit of risk. If you would invest 571,000 in Sungmoon Electronics Co on August 25, 2024 and sell it today you would lose (106,000) from holding Sungmoon Electronics Co or give up 18.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungmoon Electronics Co vs. Lotte Fine Chemical
Performance |
| Timeline |
| Sungmoon Electronics |
| Lotte Fine Chemical |
Sungmoon Electronics and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungmoon Electronics and Lotte Fine
The main advantage of trading using opposite Sungmoon Electronics and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungmoon Electronics 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.| Sungmoon Electronics vs. Samyoung Electronics Co | Sungmoon Electronics vs. Daejoo Electronic Materials | Sungmoon Electronics vs. DAEDUCK ELECTRONICS CoLtd | Sungmoon Electronics vs. Samwha Electronics Co |
| Lotte Fine vs. Infinitt Healthcare Co | Lotte Fine vs. Sungmoon Electronics Co | Lotte Fine vs. Samyoung Electronics Co | Lotte Fine vs. LG Electronics |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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