Correlation Between Lotte Energy and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Lotte Energy and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Lotte Energy and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Energy and Iljin Display.
Diversification Opportunities for Lotte Energy and Iljin Display
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Iljin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Energy Materials and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Lotte Energy i.e., Lotte Energy and Iljin Display go up and down completely randomly.
Pair Corralation between Lotte Energy and Iljin Display
Assuming the 90 days trading horizon Lotte Energy Materials is expected to under-perform the Iljin Display. In addition to that, Lotte Energy is 2.02 times more volatile than Iljin Display. It trades about -0.15 of its total potential returns per unit of risk. Iljin Display is currently generating about -0.18 per unit of volatility. If you would invest 130,600 in Iljin Display on September 2, 2024 and sell it today you would lose (44,700) from holding Iljin Display or give up 34.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Energy Materials vs. Iljin Display
Performance |
| Timeline |
| Lotte Energy Materials |
| Iljin Display |
Lotte Energy and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Energy and Iljin Display
The main advantage of trading using opposite Lotte Energy and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Energy position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Lotte Energy vs. Dongsin Engineering Construction | Lotte Energy vs. Doosan Fuel Cell | Lotte Energy vs. Daishin Balance 1 | Lotte Energy vs. Total Soft Bank |
| Iljin Display vs. Korea Investment Holdings | Iljin Display vs. Nh Investment And | Iljin Display vs. Golden Bridge Investment | Iljin Display vs. Woori Technology Investment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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