Correlation Between Korea Electric and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Korea Electric 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 Korea Electric and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electric Power and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Korea Electric 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 Korea Electric with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Lotte Chilsung.
Diversification Opportunities for Korea Electric and Lotte Chilsung
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Lotte is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power 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 Korea Electric 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 Korea Electric Power 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 Korea Electric i.e., Korea Electric and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Korea Electric and Lotte Chilsung
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 1.01 times more return on investment than Lotte Chilsung. However, Korea Electric is 1.01 times more volatile than Lotte Chilsung Beverage. It trades about 0.11 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about 0.01 per unit of risk. If you would invest 2,280,000 in Korea Electric Power on August 28, 2024 and sell it today you would earn a total of 95,000 from holding Korea Electric Power or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Korea Electric Power |
| Lotte Chilsung Beverage |
Korea Electric and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Lotte Chilsung
The main advantage of trading using opposite Korea Electric and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric 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.| Korea Electric vs. Sungwoo Electronics Co | Korea Electric vs. Cuckoo Electronics Co | Korea Electric vs. INNOX Advanced Materials | Korea Electric vs. Top Material Co |
| Lotte Chilsung vs. AptaBio Therapeutics | Lotte Chilsung vs. Daewoo SBI SPAC | Lotte Chilsung vs. Dream Security co | Lotte Chilsung vs. Microfriend |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |