Correlation Between Iljin Display and Lotte Energy
Can any of the company-specific risk be diversified away by investing in both Iljin Display and Lotte Energy 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 Iljin Display and Lotte Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and Lotte Energy Materials, you can compare the effects of market volatilities on Iljin Display and Lotte Energy 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 Iljin Display with a short position of Lotte Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Lotte Energy.
Diversification Opportunities for Iljin Display and Lotte Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Iljin and Lotte is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Lotte Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Energy Materials and Iljin Display 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 Iljin Display are associated (or correlated) with Lotte Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Energy Materials has no effect on the direction of Iljin Display i.e., Iljin Display and Lotte Energy go up and down completely randomly.
Pair Corralation between Iljin Display and Lotte Energy
Assuming the 90 days trading horizon Iljin Display is expected to generate 0.37 times more return on investment than Lotte Energy. However, Iljin Display is 2.73 times less risky than Lotte Energy. It trades about -0.23 of its potential returns per unit of risk. Lotte Energy Materials is currently generating about -0.64 per unit of risk. If you would invest 90,600 in Iljin Display on September 2, 2024 and sell it today you would lose (4,700) from holding Iljin Display or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Display vs. Lotte Energy Materials
Performance |
| Timeline |
| Iljin Display |
| Lotte Energy Materials |
Iljin Display and Lotte Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Display and Lotte Energy
The main advantage of trading using opposite Iljin Display and Lotte Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display position performs unexpectedly, Lotte Energy 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 Energy will offset losses from the drop in Lotte Energy's long position.| Iljin Display vs. Korea Investment Holdings | Iljin Display vs. Nh Investment And | Iljin Display vs. Golden Bridge Investment | Iljin Display vs. Woori Technology Investment |
| Lotte Energy vs. Dongsin Engineering Construction | Lotte Energy vs. Doosan Fuel Cell | Lotte Energy vs. Daishin Balance 1 | Lotte Energy vs. Total Soft Bank |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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