Correlation Between Han Kook and Lotte Non-Life
Can any of the company-specific risk be diversified away by investing in both Han Kook and Lotte Non-Life 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 Han Kook and Lotte Non-Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Capital and Lotte Non Life, you can compare the effects of market volatilities on Han Kook and Lotte Non-Life 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 Han Kook with a short position of Lotte Non-Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Lotte Non-Life.
Diversification Opportunities for Han Kook and Lotte Non-Life
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Han and Lotte is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Capital and Lotte Non Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Han Kook 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 Han Kook Capital are associated (or correlated) with Lotte Non-Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of Han Kook i.e., Han Kook and Lotte Non-Life go up and down completely randomly.
Pair Corralation between Han Kook and Lotte Non-Life
Assuming the 90 days trading horizon Han Kook is expected to generate 3.71 times less return on investment than Lotte Non-Life. But when comparing it to its historical volatility, Han Kook Capital is 2.16 times less risky than Lotte Non-Life. It trades about 0.03 of its potential returns per unit of risk. Lotte Non Life is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 200,000 in Lotte Non Life on September 14, 2024 and sell it today you would earn a total of 5,000 from holding Lotte Non Life or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Capital vs. Lotte Non Life
Performance |
| Timeline |
| Han Kook Capital |
| Lotte Non Life |
Han Kook and Lotte Non-Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Lotte Non-Life
The main advantage of trading using opposite Han Kook and Lotte Non-Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Lotte Non-Life 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 Non-Life will offset losses from the drop in Lotte Non-Life's long position.| Han Kook vs. CG Hi Tech | Han Kook vs. Samlip General Foods | Han Kook vs. Sam Yang Foods | Han Kook vs. Korea Shipbuilding Offshore |
| Lotte Non-Life vs. Organic Special Pet | Lotte Non-Life vs. THiRA UTECH LTD | Lotte Non-Life vs. A Tech Solution Co | Lotte Non-Life vs. Sempio Foods 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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