Correlation Between DIGITAL CHOSUN and Lotte Data
Can any of the company-specific risk be diversified away by investing in both DIGITAL CHOSUN 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 DIGITAL CHOSUN and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIGITAL CHOSUN and Lotte Data Communication, you can compare the effects of market volatilities on DIGITAL CHOSUN 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 DIGITAL CHOSUN with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIGITAL CHOSUN and Lotte Data.
Diversification Opportunities for DIGITAL CHOSUN and Lotte Data
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DIGITAL and Lotte is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN i.e., DIGITAL CHOSUN and Lotte Data go up and down completely randomly.
Pair Corralation between DIGITAL CHOSUN and Lotte Data
Assuming the 90 days trading horizon DIGITAL CHOSUN is expected to generate 0.73 times more return on investment than Lotte Data. However, DIGITAL CHOSUN is 1.36 times less risky than Lotte Data. It trades about 0.18 of its potential returns per unit of risk. Lotte Data Communication is currently generating about 0.07 per unit of risk. If you would invest 164,900 in DIGITAL CHOSUN on October 29, 2024 and sell it today you would earn a total of 7,300 from holding DIGITAL CHOSUN or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DIGITAL CHOSUN vs. Lotte Data Communication
Performance |
| Timeline |
| DIGITAL CHOSUN |
| Lotte Data Communication |
DIGITAL CHOSUN and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIGITAL CHOSUN and Lotte Data
The main advantage of trading using opposite DIGITAL CHOSUN and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIGITAL CHOSUN 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.| DIGITAL CHOSUN vs. Sangsangin Investment Securities | DIGITAL CHOSUN vs. Eagon Industrial Co | DIGITAL CHOSUN vs. SBI Investment KOREA | DIGITAL CHOSUN vs. Woori Technology Investment |
| Lotte Data vs. Hyundai Home Shopping | Lotte Data vs. Daejung Chemicals Metals | Lotte Data vs. Hansol Homedeco Co | Lotte Data vs. Homecast CoLtd |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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