Correlation Between SBI Investment and Lotte Non
Can any of the company-specific risk be diversified away by investing in both SBI Investment 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 SBI Investment and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and Lotte Non Life, you can compare the effects of market volatilities on SBI Investment 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 SBI Investment with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Lotte Non.
Diversification Opportunities for SBI Investment and Lotte Non
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBI and Lotte is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Lotte Non Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and SBI Investment 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 SBI Investment KOREA 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 SBI Investment i.e., SBI Investment and Lotte Non go up and down completely randomly.
Pair Corralation between SBI Investment and Lotte Non
Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the Lotte Non. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 1.51 times less risky than Lotte Non. The stock trades about -0.01 of its potential returns per unit of risk. The Lotte Non Life is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 229,000 in Lotte Non Life on August 25, 2024 and sell it today you would lose (31,200) from holding Lotte Non Life or give up 13.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. Lotte Non Life
Performance |
| Timeline |
| SBI Investment KOREA |
| Lotte Non Life |
SBI Investment and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and Lotte Non
The main advantage of trading using opposite SBI Investment and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment 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.| SBI Investment vs. Korea New Network | SBI Investment vs. Dong A Eltek | SBI Investment vs. Dreamus Company | SBI Investment vs. SK Bioscience Co |
| Lotte Non vs. SBI Investment KOREA | Lotte Non vs. EBEST Investment Securities | Lotte Non vs. Jeju Air Co | Lotte Non vs. Daewoo Engineering Construction |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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