Correlation Between Nice Information and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Nice Information and Lotte Chilsung 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 Nice Information and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice Information Telecommunication and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Nice Information and Lotte Chilsung 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 Nice Information with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and Lotte Chilsung.
Diversification Opportunities for Nice Information and Lotte Chilsung
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nice and Lotte is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Nice 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 Nice Information Telecommunication are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Nice Information i.e., Nice Information and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Nice Information and Lotte Chilsung
Assuming the 90 days trading horizon Nice Information Telecommunication is expected to under-perform the Lotte Chilsung. But the stock apears to be less risky and, when comparing its historical volatility, Nice Information Telecommunication is 1.66 times less risky than Lotte Chilsung. The stock trades about -0.13 of its potential returns per unit of risk. The Lotte Chilsung Beverage is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 12,930,000 in Lotte Chilsung Beverage on September 1, 2024 and sell it today you would lose (850,000) from holding Lotte Chilsung Beverage or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice Information Telecommunica vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Nice Information Tel |
| Lotte Chilsung Beverage |
Nice Information and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice Information and Lotte Chilsung
The main advantage of trading using opposite Nice Information and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice Information position performs unexpectedly, Lotte Chilsung 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 Chilsung will offset losses from the drop in Lotte Chilsung's long position.| Nice Information vs. Dongsin Engineering Construction | Nice Information vs. Doosan Fuel Cell | Nice Information vs. Daishin Balance 1 | Nice Information vs. Total Soft Bank |
| Lotte Chilsung vs. EV Advanced Material | Lotte Chilsung vs. DAEDUCK ELECTRONICS CoLtd | Lotte Chilsung vs. Hansol Homedeco Co | Lotte Chilsung vs. Hyundai Engineering Plastics |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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