Correlation Between Lotte Energy and Korea Refract
Can any of the company-specific risk be diversified away by investing in both Lotte Energy and Korea Refract 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 Korea Refract 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 Korea Refract, you can compare the effects of market volatilities on Lotte Energy and Korea Refract 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 Korea Refract. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Energy and Korea Refract.
Diversification Opportunities for Lotte Energy and Korea Refract
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Korea is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Energy Materials and Korea Refract in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refract 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 Korea Refract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refract has no effect on the direction of Lotte Energy i.e., Lotte Energy and Korea Refract go up and down completely randomly.
Pair Corralation between Lotte Energy and Korea Refract
Assuming the 90 days trading horizon Lotte Energy Materials is expected to under-perform the Korea Refract. In addition to that, Lotte Energy is 1.2 times more volatile than Korea Refract. It trades about -0.03 of its total potential returns per unit of risk. Korea Refract is currently generating about -0.01 per unit of volatility. If you would invest 288,127 in Korea Refract on November 21, 2024 and sell it today you would lose (70,627) from holding Korea Refract or give up 24.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Energy Materials vs. Korea Refract
Performance |
| Timeline |
| Lotte Energy Materials |
| Korea Refract |
Lotte Energy and Korea Refract Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Energy and Korea Refract
The main advantage of trading using opposite Lotte Energy and Korea Refract positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Energy position performs unexpectedly, Korea Refract 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 Korea Refract will offset losses from the drop in Korea Refract's long position.| Lotte Energy vs. T3 Entertainment Co | Lotte Energy vs. Histeel | Lotte Energy vs. Hanil Iron Steel | Lotte Energy vs. Daehan Steel |
| Korea Refract vs. Hyundai Engineering Construction | Korea Refract vs. Korea Investment Holdings | Korea Refract vs. Dongwoo Farm To | Korea Refract vs. KCC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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