Correlation Between Namhae Chemical and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical 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 Namhae Chemical and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Lotte Non Life Insurance, you can compare the effects of market volatilities on Namhae Chemical 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 Namhae Chemical with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Lotte Non.
Diversification Opportunities for Namhae Chemical and Lotte Non
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Namhae and Lotte is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Namhae Chemical 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 Namhae Chemical 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 Namhae Chemical i.e., Namhae Chemical and Lotte Non go up and down completely randomly.
Pair Corralation between Namhae Chemical and Lotte Non
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 2.37 times less return on investment than Lotte Non. But when comparing it to its historical volatility, Namhae Chemical is 1.23 times less risky than Lotte Non. It trades about 0.17 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 182,000 in Lotte Non Life Insurance on October 9, 2024 and sell it today you would earn a total of 23,500 from holding Lotte Non Life Insurance or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Namhae Chemical |
| Lotte Non Life |
Namhae Chemical and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Lotte Non
The main advantage of trading using opposite Namhae Chemical and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical 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.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
| Lotte Non vs. Stic Investments | Lotte Non vs. CU Medical Systems | Lotte Non vs. DSC Investment | Lotte Non vs. SV Investment |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |