Correlation Between Daol Investment and Lotte Rental
Can any of the company-specific risk be diversified away by investing in both Daol Investment and Lotte Rental 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 Daol Investment and Lotte Rental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daol Investment Securities and Lotte Rental Co, you can compare the effects of market volatilities on Daol Investment and Lotte Rental 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 Daol Investment with a short position of Lotte Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daol Investment and Lotte Rental.
Diversification Opportunities for Daol Investment and Lotte Rental
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daol and Lotte is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Daol Investment Securities and Lotte Rental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Rental and Daol Investment 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 Daol Investment Securities are associated (or correlated) with Lotte Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Rental has no effect on the direction of Daol Investment i.e., Daol Investment and Lotte Rental go up and down completely randomly.
Pair Corralation between Daol Investment and Lotte Rental
Assuming the 90 days trading horizon Daol Investment Securities is expected to under-perform the Lotte Rental. In addition to that, Daol Investment is 1.96 times more volatile than Lotte Rental Co. It trades about -0.03 of its total potential returns per unit of risk. Lotte Rental Co is currently generating about 0.02 per unit of volatility. If you would invest 2,580,000 in Lotte Rental Co on October 29, 2024 and sell it today you would earn a total of 215,000 from holding Lotte Rental Co or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daol Investment Securities vs. Lotte Rental Co
Performance |
| Timeline |
| Daol Investment Secu |
| Lotte Rental |
Daol Investment and Lotte Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daol Investment and Lotte Rental
The main advantage of trading using opposite Daol Investment and Lotte Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daol Investment position performs unexpectedly, Lotte Rental 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 Rental will offset losses from the drop in Lotte Rental's long position.| Daol Investment vs. Samsung Electronics Co | Daol Investment vs. Samsung Electronics Co | Daol Investment vs. LG Energy Solution | Daol Investment vs. SK Hynix |
| Lotte Rental vs. FOODWELL Co | Lotte Rental vs. Hankukpackage Co | Lotte Rental vs. Samyang Foods Co | Lotte Rental vs. ITM Semiconductor 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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