Correlation Between Korea Information and Lotte Corp
Can any of the company-specific risk be diversified away by investing in both Korea Information 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 Korea Information and Lotte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Lotte Corp, you can compare the effects of market volatilities on Korea Information 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 Korea Information with a short position of Lotte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Lotte Corp.
Diversification Opportunities for Korea Information and Lotte Corp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Lotte is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Lotte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Corp and Korea Information 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 Korea Information Communications 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 Korea Information i.e., Korea Information and Lotte Corp go up and down completely randomly.
Pair Corralation between Korea Information and Lotte Corp
Assuming the 90 days trading horizon Korea Information Communications is expected to generate 1.4 times more return on investment than Lotte Corp. However, Korea Information is 1.4 times more volatile than Lotte Corp. It trades about -0.02 of its potential returns per unit of risk. Lotte Corp is currently generating about -0.04 per unit of risk. If you would invest 1,200,000 in Korea Information Communications on September 3, 2024 and sell it today you would lose (388,000) from holding Korea Information Communications or give up 32.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Lotte Corp
Performance |
| Timeline |
| Korea Information |
| Lotte Corp |
Korea Information and Lotte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Lotte Corp
The main advantage of trading using opposite Korea Information and Lotte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information 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.| Korea Information vs. Cloud Air CoLtd | Korea Information vs. Genie Music | Korea Information vs. Samlip General Foods | Korea Information vs. Organic Special Pet |
| Lotte Corp vs. Asiana Airlines | Lotte Corp vs. Korea Information Communications | Lotte Corp vs. DONGKUK TED METAL | Lotte Corp vs. Mobile Appliance |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |