Correlation Between Daou Tech and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Daou Tech and Lotte Data 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 Daou Tech and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Tech and Lotte Data Communication, you can compare the effects of market volatilities on Daou Tech and Lotte Data 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 Daou Tech with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Tech and Lotte Data.
Diversification Opportunities for Daou Tech and Lotte Data
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daou and Lotte is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Daou Tech and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Daou Tech 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 Daou Tech are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Daou Tech i.e., Daou Tech and Lotte Data go up and down completely randomly.
Pair Corralation between Daou Tech and Lotte Data
Assuming the 90 days trading horizon Daou Tech is expected to generate 0.29 times more return on investment than Lotte Data. However, Daou Tech is 3.43 times less risky than Lotte Data. It trades about 0.01 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.17 per unit of risk. If you would invest 1,818,000 in Daou Tech on August 26, 2024 and sell it today you would earn a total of 2,000 from holding Daou Tech or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Tech vs. Lotte Data Communication
Performance |
| Timeline |
| Daou Tech |
| Lotte Data Communication |
Daou Tech and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Tech and Lotte Data
The main advantage of trading using opposite Daou Tech and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Tech position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Daou Tech vs. Korea New Network | Daou Tech vs. Dong A Eltek | Daou Tech vs. Dreamus Company | Daou Tech vs. SK Bioscience Co |
| Lotte Data vs. SK Holdings Co | Lotte Data vs. Daou Tech | Lotte Data vs. KT Corporation | Lotte Data vs. Samsung Heavy Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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