Correlation Between Hwangkum Steel and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Lotte Data 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 Hwangkum Steel and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hwangkum Steel Technology and Lotte Data Communication, you can compare the effects of market volatilities on Hwangkum Steel and Lotte Data 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 Hwangkum Steel with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Lotte Data.
Diversification Opportunities for Hwangkum Steel and Lotte Data
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hwangkum and Lotte is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Hwangkum Steel 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 Hwangkum Steel Technology are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Lotte Data go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Lotte Data
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.48 times more return on investment than Lotte Data. However, Hwangkum Steel Technology is 2.07 times less risky than Lotte Data. It trades about -0.13 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.09 per unit of risk. If you would invest 682,000 in Hwangkum Steel Technology on September 3, 2024 and sell it today you would lose (166,000) from holding Hwangkum Steel Technology or give up 24.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwangkum Steel Technology vs. Lotte Data Communication
Performance |
| Timeline |
| Hwangkum Steel Technology |
| Lotte Data Communication |
Hwangkum Steel and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwangkum Steel and Lotte Data
The main advantage of trading using opposite Hwangkum Steel and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum Steel position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Hwangkum Steel vs. DB Insurance Co | Hwangkum Steel vs. Jeju Beer Co | Hwangkum Steel vs. Korean Reinsurance Co | Hwangkum Steel vs. Dongbu Insurance Co |
| Lotte Data vs. Seoul Food Industrial | Lotte Data vs. Hannong Chemicals | Lotte Data vs. Sung Bo Chemicals | Lotte Data vs. Samhwa Paint Industrial |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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