Correlation Between Osang Healthcare and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Osang Healthcare 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 Osang Healthcare and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Osang Healthcare Co,Ltd and Lotte Chemical Corp, you can compare the effects of market volatilities on Osang Healthcare 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 Osang Healthcare with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osang Healthcare and Lotte Chemical.
Diversification Opportunities for Osang Healthcare and Lotte Chemical
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Osang and Lotte is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Osang Healthcare Co,Ltd 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 Osang Healthcare 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 Osang Healthcare Co,Ltd 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 Osang Healthcare i.e., Osang Healthcare and Lotte Chemical go up and down completely randomly.
Pair Corralation between Osang Healthcare and Lotte Chemical
Assuming the 90 days trading horizon Osang Healthcare Co,Ltd is expected to under-perform the Lotte Chemical. In addition to that, Osang Healthcare is 1.16 times more volatile than Lotte Chemical Corp. It trades about -0.11 of its total potential returns per unit of risk. Lotte Chemical Corp is currently generating about -0.09 per unit of volatility. If you would invest 15,103,400 in Lotte Chemical Corp on September 14, 2024 and sell it today you would lose (8,603,400) from holding Lotte Chemical Corp or give up 56.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.08% |
| Values | Daily Returns |
Osang Healthcare Co,Ltd vs. Lotte Chemical Corp
Performance |
| Timeline |
| Osang Healthcare Co,Ltd |
| Lotte Chemical Corp |
Osang Healthcare and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Osang Healthcare and Lotte Chemical
The main advantage of trading using opposite Osang Healthcare and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osang Healthcare 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.| Osang Healthcare vs. CU Tech Corp | Osang Healthcare vs. Orbitech Co | Osang Healthcare vs. Mgame Corp | Osang Healthcare vs. A Tech Solution Co |
| Lotte Chemical vs. Ssangyong Information Communication | Lotte Chemical vs. Nable Communications | Lotte Chemical vs. Shinsegae Information Communication | Lotte Chemical vs. MetaLabs 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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