Correlation Between Daewoo Engineering and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Lotte Non 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 Daewoo Engineering and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Engineering Construction and Lotte Non Life, you can compare the effects of market volatilities on Daewoo Engineering and Lotte Non 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 Daewoo Engineering with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Lotte Non.
Diversification Opportunities for Daewoo Engineering and Lotte Non
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daewoo and Lotte is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Lotte Non Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Daewoo Engineering 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 Daewoo Engineering Construction are associated (or correlated) with Lotte Non. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Lotte Non go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Lotte Non
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 0.9 times more return on investment than Lotte Non. However, Daewoo Engineering Construction is 1.11 times less risky than Lotte Non. It trades about 0.05 of its potential returns per unit of risk. Lotte Non Life is currently generating about -0.15 per unit of risk. If you would invest 367,500 in Daewoo Engineering Construction on August 29, 2024 and sell it today you would earn a total of 7,000 from holding Daewoo Engineering Construction or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Lotte Non Life
Performance |
| Timeline |
| Daewoo Engineering |
| Lotte Non Life |
Daewoo Engineering and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Lotte Non
The main advantage of trading using opposite Daewoo Engineering and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Lotte Non 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 Non will offset losses from the drop in Lotte Non's long position.| Daewoo Engineering vs. Samsung Electronics Co | Daewoo Engineering vs. Samsung Electronics Co | Daewoo Engineering vs. KB Financial Group | Daewoo Engineering vs. Shinhan Financial Group |
| Lotte Non vs. Daou Data Corp | Lotte Non vs. Alton Sports CoLtd | Lotte Non vs. Display Tech Co | Lotte Non vs. Sangsin Energy Display |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |