Correlation Between Seoul Semiconductor and Lotte Rental
Can any of the company-specific risk be diversified away by investing in both Seoul Semiconductor and Lotte Rental 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 Seoul Semiconductor and Lotte Rental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Semiconductor Co and Lotte Rental Co, you can compare the effects of market volatilities on Seoul Semiconductor and Lotte Rental 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 Seoul Semiconductor with a short position of Lotte Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Semiconductor and Lotte Rental.
Diversification Opportunities for Seoul Semiconductor and Lotte Rental
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seoul and Lotte is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Semiconductor Co and Lotte Rental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Rental and Seoul Semiconductor 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 Seoul Semiconductor Co are associated (or correlated) with Lotte Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Rental has no effect on the direction of Seoul Semiconductor i.e., Seoul Semiconductor and Lotte Rental go up and down completely randomly.
Pair Corralation between Seoul Semiconductor and Lotte Rental
Assuming the 90 days trading horizon Seoul Semiconductor Co is expected to generate 1.6 times more return on investment than Lotte Rental. However, Seoul Semiconductor is 1.6 times more volatile than Lotte Rental Co. It trades about 0.11 of its potential returns per unit of risk. Lotte Rental Co is currently generating about -0.41 per unit of risk. If you would invest 722,582 in Seoul Semiconductor Co on October 14, 2024 and sell it today you would earn a total of 27,418 from holding Seoul Semiconductor Co or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Semiconductor Co vs. Lotte Rental Co
Performance |
| Timeline |
| Seoul Semiconductor |
| Lotte Rental |
Seoul Semiconductor and Lotte Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Semiconductor and Lotte Rental
The main advantage of trading using opposite Seoul Semiconductor and Lotte Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Semiconductor position performs unexpectedly, Lotte Rental 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 Rental will offset losses from the drop in Lotte Rental's long position.The idea behind Seoul Semiconductor Co and Lotte Rental Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lotte Rental vs. Sangsin Energy Display | Lotte Rental vs. Aprogen Healthcare Games | Lotte Rental vs. Seoul Semiconductor Co | Lotte Rental vs. Alton Sports 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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