Correlation Between Hankuk Steel and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Lotte Reit 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 Hankuk Steel and Lotte Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hankuk Steel Wire and Lotte Reit Co, you can compare the effects of market volatilities on Hankuk Steel and Lotte Reit 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 Hankuk Steel with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Lotte Reit.
Diversification Opportunities for Hankuk Steel and Lotte Reit
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hankuk and Lotte is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit and Hankuk Steel 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 Hankuk Steel Wire are associated (or correlated) with Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Lotte Reit go up and down completely randomly.
Pair Corralation between Hankuk Steel and Lotte Reit
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 1.61 times more return on investment than Lotte Reit. However, Hankuk Steel is 1.61 times more volatile than Lotte Reit Co. It trades about 0.03 of its potential returns per unit of risk. Lotte Reit Co is currently generating about 0.02 per unit of risk. If you would invest 372,421 in Hankuk Steel Wire on September 14, 2024 and sell it today you would earn a total of 43,079 from holding Hankuk Steel Wire or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Lotte Reit Co
Performance |
| Timeline |
| Hankuk Steel Wire |
| Lotte Reit |
Hankuk Steel and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Lotte Reit
The main advantage of trading using opposite Hankuk Steel and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Lotte Reit 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 Reit will offset losses from the drop in Lotte Reit's long position.| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Hanwha Solutions | Hankuk Steel vs. Lotte Chemical Corp |
| Lotte Reit vs. Automobile Pc | Lotte Reit vs. Miwon Chemicals Co | Lotte Reit vs. Korea Shipbuilding Offshore | Lotte Reit vs. Eagon Industrial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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