Correlation Between Automobile and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Automobile and Lotte Reit 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 Automobile and Lotte Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Lotte Reit Co, you can compare the effects of market volatilities on Automobile and Lotte Reit 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 Automobile with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Lotte Reit.
Diversification Opportunities for Automobile and Lotte Reit
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Automobile and Lotte is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit and Automobile 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 Automobile Pc are associated (or correlated) with Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Automobile i.e., Automobile and Lotte Reit go up and down completely randomly.
Pair Corralation between Automobile and Lotte Reit
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Lotte Reit. In addition to that, Automobile is 2.59 times more volatile than Lotte Reit Co. It trades about -0.04 of its total potential returns per unit of risk. Lotte Reit Co is currently generating about -0.02 per unit of volatility. If you would invest 368,816 in Lotte Reit Co on September 14, 2024 and sell it today you would lose (52,316) from holding Lotte Reit Co or give up 14.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Automobile Pc vs. Lotte Reit Co
Performance |
| Timeline |
| Automobile Pc |
| Lotte Reit |
Automobile and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Lotte Reit
The main advantage of trading using opposite Automobile and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Lotte Reit 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 Reit will offset losses from the drop in Lotte Reit's long position.| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
| Lotte Reit vs. Automobile Pc | Lotte Reit vs. Miwon Chemicals Co | Lotte Reit vs. Korea Shipbuilding Offshore | Lotte Reit vs. Eagon Industrial 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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