Correlation Between Industrial Bank and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Lotte Non 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 Industrial Bank and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Lotte Non Life, you can compare the effects of market volatilities on Industrial Bank and Lotte Non 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 Industrial Bank with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Lotte Non.
Diversification Opportunities for Industrial Bank and Lotte Non
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Lotte is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank 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 Industrial Bank 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 Industrial Bank are associated (or correlated) with Lotte Non. 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 Industrial Bank i.e., Industrial Bank and Lotte Non go up and down completely randomly.
Pair Corralation between Industrial Bank and Lotte Non
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.45 times more return on investment than Lotte Non. However, Industrial Bank is 2.23 times less risky than Lotte Non. It trades about 0.09 of its potential returns per unit of risk. Lotte Non Life is currently generating about -0.2 per unit of risk. If you would invest 1,396,000 in Industrial Bank on August 29, 2024 and sell it today you would earn a total of 73,000 from holding Industrial Bank or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Lotte Non Life
Performance |
| Timeline |
| Industrial Bank |
| Lotte Non Life |
Industrial Bank and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Lotte Non
The main advantage of trading using opposite Industrial Bank and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Lotte Non 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 will offset losses from the drop in Lotte Non's long position.| Industrial Bank vs. TOPMATERIAL LTD | Industrial Bank vs. LS Materials | Industrial Bank vs. Taegu Broadcasting | Industrial Bank vs. Top Material Co |
| Lotte Non vs. Daou Data Corp | Lotte Non vs. Alton Sports CoLtd | Lotte Non vs. Display Tech Co | Lotte Non vs. Sangsin Energy Display |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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