Correlation Between Lotte Energy and Hanil Iron
Can any of the company-specific risk be diversified away by investing in both Lotte Energy and Hanil Iron 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 Lotte Energy and Hanil Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Energy Materials and Hanil Iron Steel, you can compare the effects of market volatilities on Lotte Energy and Hanil Iron 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 Lotte Energy with a short position of Hanil Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Energy and Hanil Iron.
Diversification Opportunities for Lotte Energy and Hanil Iron
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Hanil is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Energy Materials and Hanil Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Iron Steel and Lotte Energy 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 Lotte Energy Materials are associated (or correlated) with Hanil Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Iron Steel has no effect on the direction of Lotte Energy i.e., Lotte Energy and Hanil Iron go up and down completely randomly.
Pair Corralation between Lotte Energy and Hanil Iron
Assuming the 90 days trading horizon Lotte Energy Materials is expected to under-perform the Hanil Iron. In addition to that, Lotte Energy is 1.73 times more volatile than Hanil Iron Steel. It trades about -0.31 of its total potential returns per unit of risk. Hanil Iron Steel is currently generating about 0.08 per unit of volatility. If you would invest 193,000 in Hanil Iron Steel on September 14, 2024 and sell it today you would earn a total of 5,900 from holding Hanil Iron Steel or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Energy Materials vs. Hanil Iron Steel
Performance |
| Timeline |
| Lotte Energy Materials |
| Hanil Iron Steel |
Lotte Energy and Hanil Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Energy and Hanil Iron
The main advantage of trading using opposite Lotte Energy and Hanil Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Energy position performs unexpectedly, Hanil Iron 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 Hanil Iron will offset losses from the drop in Hanil Iron's long position.| Lotte Energy vs. Cube Entertainment | Lotte Energy vs. Dreamus Company | Lotte Energy vs. LG Energy Solution | Lotte Energy vs. Dongwon System |
| Hanil Iron vs. Samsung Electronics Co | Hanil Iron vs. Samsung Electronics Co | Hanil Iron vs. SK Hynix | Hanil Iron vs. POSCO Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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