Correlation Between KTB Investment and Lotte Rental
Can any of the company-specific risk be diversified away by investing in both KTB 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 KTB 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 KTB Investment Securities and Lotte Rental Co, you can compare the effects of market volatilities on KTB 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 KTB Investment with a short position of Lotte Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTB Investment and Lotte Rental.
Diversification Opportunities for KTB Investment and Lotte Rental
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KTB and Lotte is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding KTB 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 KTB 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 KTB 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 KTB Investment i.e., KTB Investment and Lotte Rental go up and down completely randomly.
Pair Corralation between KTB Investment and Lotte Rental
Assuming the 90 days trading horizon KTB Investment Securities is expected to under-perform the Lotte Rental. In addition to that, KTB 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 |
KTB Investment Securities vs. Lotte Rental Co
Performance |
| Timeline |
| KTB Investment Securities |
| Lotte Rental |
KTB Investment and Lotte Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KTB Investment and Lotte Rental
The main advantage of trading using opposite KTB Investment and Lotte Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KTB 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.| KTB Investment vs. Hyunwoo Industrial Co | KTB Investment vs. Seoul Food Industrial | KTB Investment vs. Korea Industrial Co | KTB Investment vs. Shinil Industrial Co |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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