Correlation Between SBI Investment and Lotte Data
Can any of the company-specific risk be diversified away by investing in both SBI Investment and Lotte Data 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 Data 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 Data Communication, you can compare the effects of market volatilities on SBI Investment and Lotte Data 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 Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Lotte Data.
Diversification Opportunities for SBI Investment and Lotte Data
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBI and Lotte is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication 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 Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of SBI Investment i.e., SBI Investment and Lotte Data go up and down completely randomly.
Pair Corralation between SBI Investment and Lotte Data
Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 1.15 times more return on investment than Lotte Data. However, SBI Investment is 1.15 times more volatile than Lotte Data Communication. It trades about 0.09 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of risk. If you would invest 67,000 in SBI Investment KOREA on August 25, 2024 and sell it today you would earn a total of 3,400 from holding SBI Investment KOREA or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SBI Investment KOREA vs. Lotte Data Communication
Performance |
| Timeline |
| SBI Investment KOREA |
| Lotte Data Communication |
SBI Investment and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and Lotte Data
The main advantage of trading using opposite SBI Investment and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data'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 Data vs. SCI Information Service | Lotte Data vs. DataSolution | Lotte Data vs. Koryo Credit Information | Lotte Data vs. Seoul Electronics Telecom |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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