Correlation Between Pungguk Ethanol and Lotte Corp
Can any of the company-specific risk be diversified away by investing in both Pungguk Ethanol 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 Pungguk Ethanol and Lotte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pungguk Ethanol Industrial and Lotte Corp, you can compare the effects of market volatilities on Pungguk Ethanol 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 Pungguk Ethanol with a short position of Lotte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pungguk Ethanol and Lotte Corp.
Diversification Opportunities for Pungguk Ethanol and Lotte Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pungguk and Lotte is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pungguk Ethanol Industrial and Lotte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Corp and Pungguk Ethanol 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 Pungguk Ethanol Industrial 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 Pungguk Ethanol i.e., Pungguk Ethanol and Lotte Corp go up and down completely randomly.
Pair Corralation between Pungguk Ethanol and Lotte Corp
Assuming the 90 days trading horizon Pungguk Ethanol Industrial is expected to under-perform the Lotte Corp. In addition to that, Pungguk Ethanol is 1.07 times more volatile than Lotte Corp. It trades about -0.11 of its total potential returns per unit of risk. Lotte Corp is currently generating about -0.1 per unit of volatility. If you would invest 2,540,000 in Lotte Corp on September 2, 2024 and sell it today you would lose (450,000) from holding Lotte Corp or give up 17.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pungguk Ethanol Industrial vs. Lotte Corp
Performance |
| Timeline |
| Pungguk Ethanol Indu |
| Lotte Corp |
Pungguk Ethanol and Lotte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pungguk Ethanol and Lotte Corp
The main advantage of trading using opposite Pungguk Ethanol and Lotte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pungguk Ethanol 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.| Pungguk Ethanol vs. Korea Real Estate | Pungguk Ethanol vs. Korea Ratings Co | Pungguk Ethanol vs. IQuest Co | Pungguk Ethanol vs. Wonbang Tech Co |
| Lotte Corp vs. Shinsegae Information Communication | Lotte Corp vs. DataSolution | Lotte Corp vs. Lotte Data Communication | Lotte Corp vs. Kisan Telecom 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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