Correlation Between Asiana Airlines and Lotte Corp
Can any of the company-specific risk be diversified away by investing in both Asiana Airlines and Lotte Corp 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 Asiana Airlines and Lotte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiana Airlines and Lotte Corp, you can compare the effects of market volatilities on Asiana Airlines and Lotte Corp 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 Asiana Airlines with a short position of Lotte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and Lotte Corp.
Diversification Opportunities for Asiana Airlines and Lotte Corp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asiana and Lotte is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and Lotte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Corp and Asiana Airlines 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 Asiana Airlines are associated (or correlated) with Lotte Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Corp has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and Lotte Corp go up and down completely randomly.
Pair Corralation between Asiana Airlines and Lotte Corp
Assuming the 90 days trading horizon Asiana Airlines is expected to generate 1.12 times more return on investment than Lotte Corp. However, Asiana Airlines is 1.12 times more volatile than Lotte Corp. It trades about -0.02 of its potential returns per unit of risk. Lotte Corp is currently generating about -0.04 per unit of risk. If you would invest 1,345,000 in Asiana Airlines on September 3, 2024 and sell it today you would lose (271,000) from holding Asiana Airlines or give up 20.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asiana Airlines vs. Lotte Corp
Performance |
| Timeline |
| Asiana Airlines |
| Lotte Corp |
Asiana Airlines and Lotte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asiana Airlines and Lotte Corp
The main advantage of trading using opposite Asiana Airlines and Lotte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiana Airlines position performs unexpectedly, Lotte Corp 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 Corp will offset losses from the drop in Lotte Corp's long position.| Asiana Airlines vs. AptaBio Therapeutics | Asiana Airlines vs. Daewoo SBI SPAC | Asiana Airlines vs. Dream Security co | Asiana Airlines vs. Microfriend |
| Lotte Corp vs. Asiana Airlines | Lotte Corp vs. Korea Information Communications | Lotte Corp vs. DONGKUK TED METAL | Lotte Corp vs. Mobile Appliance |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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