Correlation Between Lotte Energy and NH Investment
Can any of the company-specific risk be diversified away by investing in both Lotte Energy and NH Investment 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 NH Investment 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 NH Investment Securities, you can compare the effects of market volatilities on Lotte Energy and NH Investment 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 NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Energy and NH Investment.
Diversification Opportunities for Lotte Energy and NH Investment
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and 005940 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Energy Materials and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities 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 NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Lotte Energy i.e., Lotte Energy and NH Investment go up and down completely randomly.
Pair Corralation between Lotte Energy and NH Investment
Assuming the 90 days trading horizon Lotte Energy Materials is expected to under-perform the NH Investment. In addition to that, Lotte Energy is 2.37 times more volatile than NH Investment Securities. It trades about -0.21 of its total potential returns per unit of risk. NH Investment Securities is currently generating about 0.0 per unit of volatility. If you would invest 1,366,000 in NH Investment Securities on October 14, 2024 and sell it today you would lose (15,000) from holding NH Investment Securities or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Energy Materials vs. NH Investment Securities
Performance |
| Timeline |
| Lotte Energy Materials |
| NH Investment Securities |
Lotte Energy and NH Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Energy and NH Investment
The main advantage of trading using opposite Lotte Energy and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Energy position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.| Lotte Energy vs. Hankook Steel Co | Lotte Energy vs. SeAH Besteel Corp | Lotte Energy vs. Digital Power Communications | Lotte Energy vs. KT Submarine Telecom |
| NH Investment vs. Seoyon Topmetal Co | NH Investment vs. TS Investment Corp | NH Investment vs. Worldex Industry Trading | NH Investment vs. Handok Clean Tech |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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