Correlation Between SCI Information and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both SCI Information and Lotte Chemical 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 SCI Information and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and Lotte Chemical Corp, you can compare the effects of market volatilities on SCI Information and Lotte Chemical 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 SCI Information with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and Lotte Chemical.
Diversification Opportunities for SCI Information and Lotte Chemical
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCI and Lotte is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and Lotte Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Corp and SCI Information 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 SCI Information Service are associated (or correlated) with Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Corp has no effect on the direction of SCI Information i.e., SCI Information and Lotte Chemical go up and down completely randomly.
Pair Corralation between SCI Information and Lotte Chemical
Assuming the 90 days trading horizon SCI Information Service is expected to generate 0.89 times more return on investment than Lotte Chemical. However, SCI Information Service is 1.13 times less risky than Lotte Chemical. It trades about -0.13 of its potential returns per unit of risk. Lotte Chemical Corp is currently generating about -0.22 per unit of risk. If you would invest 237,000 in SCI Information Service on November 8, 2024 and sell it today you would lose (10,000) from holding SCI Information Service or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. Lotte Chemical Corp
Performance |
| Timeline |
| SCI Information Service |
| Lotte Chemical Corp |
SCI Information and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and Lotte Chemical
The main advantage of trading using opposite SCI Information and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, Lotte Chemical 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 Chemical will offset losses from the drop in Lotte Chemical's long position.| SCI Information vs. Heungkuk Metaltech CoLtd | SCI Information vs. Dongil Metal Co | SCI Information vs. Daejung Chemicals Metals | SCI Information vs. Miwon Chemical |
| Lotte Chemical vs. Finebesteel | Lotte Chemical vs. INFINITT Healthcare Co | Lotte Chemical vs. Daechang Steel Co | Lotte Chemical vs. Hironic 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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