Correlation Between Daou Technology and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Daou Technology and Lotte Fine 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 Technology and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and Lotte Fine Chemical, you can compare the effects of market volatilities on Daou Technology and Lotte Fine 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 Technology with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and Lotte Fine.
Diversification Opportunities for Daou Technology and Lotte Fine
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daou and Lotte is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Daou Technology 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 Technology are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Daou Technology i.e., Daou Technology and Lotte Fine go up and down completely randomly.
Pair Corralation between Daou Technology and Lotte Fine
Assuming the 90 days trading horizon Daou Technology is expected to generate 0.6 times more return on investment than Lotte Fine. However, Daou Technology is 1.67 times less risky than Lotte Fine. It trades about 0.02 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about -0.09 per unit of risk. If you would invest 1,777,000 in Daou Technology on November 4, 2024 and sell it today you would earn a total of 5,000 from holding Daou Technology or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. Lotte Fine Chemical
Performance |
| Timeline |
| Daou Technology |
| Lotte Fine Chemical |
Daou Technology and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and Lotte Fine
The main advantage of trading using opposite Daou Technology and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology position performs unexpectedly, Lotte Fine 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 Fine will offset losses from the drop in Lotte Fine's long position.| Daou Technology vs. Daesung Hi Tech Co | Daou Technology vs. SV Investment | Daou Technology vs. Atinum Investment Co | Daou Technology vs. LG Display Co |
| Lotte Fine vs. Atinum Investment Co | Lotte Fine vs. E Investment Development | Lotte Fine vs. Woori Technology Investment | Lotte Fine vs. Jin Air Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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