Correlation Between Korea Information and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Korea 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 Korea 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 Korea Information Engineering and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Korea 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 Korea Information with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Lotte Chilsung.
Diversification Opportunities for Korea Information and Lotte Chilsung
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korea and Lotte is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering 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 Korea 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 Korea Information Engineering 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 Korea Information i.e., Korea Information and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Korea Information and Lotte Chilsung
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 1.36 times more return on investment than Lotte Chilsung. However, Korea Information is 1.36 times more volatile than Lotte Chilsung Beverage. It trades about 0.06 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.06 per unit of risk. If you would invest 261,500 in Korea Information Engineering on September 13, 2024 and sell it today you would earn a total of 13,500 from holding Korea Information Engineering or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Korea Information |
| Lotte Chilsung Beverage |
Korea Information and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Lotte Chilsung
The main advantage of trading using opposite Korea Information and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea 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.| Korea Information vs. Cube Entertainment | Korea Information vs. Dreamus Company | Korea Information vs. LG Energy Solution | Korea Information vs. Dongwon System |
| Lotte Chilsung vs. Korea New Network | Lotte Chilsung vs. ICD Co | Lotte Chilsung vs. DYPNF CoLtd | Lotte Chilsung vs. Solution Advanced Technology |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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