Correlation Between Seoul Electronics and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics 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 Seoul Electronics and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Electronics Telecom and Lotte Non Life Insurance, you can compare the effects of market volatilities on Seoul Electronics 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 Seoul Electronics with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Lotte Non.
Diversification Opportunities for Seoul Electronics and Lotte Non
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Lotte is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom 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 Seoul Electronics 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 Seoul Electronics Telecom 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 Seoul Electronics i.e., Seoul Electronics and Lotte Non go up and down completely randomly.
Pair Corralation between Seoul Electronics and Lotte Non
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 2.39 times more return on investment than Lotte Non. However, Seoul Electronics is 2.39 times more volatile than Lotte Non Life Insurance. It trades about 0.05 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about -0.07 per unit of risk. If you would invest 22,800 in Seoul Electronics Telecom on October 30, 2024 and sell it today you would earn a total of 500.00 from holding Seoul Electronics Telecom or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Lotte Non Life |
Seoul Electronics and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Lotte Non
The main advantage of trading using opposite Seoul Electronics and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics 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.| Seoul Electronics vs. Jinro Distillers Co | Seoul Electronics vs. Korea Alcohol Industrial | Seoul Electronics vs. Ssangyong Information Communication | Seoul Electronics vs. Green Cross Medical |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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