Correlation Between LG Chemicals and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Lotte Reit 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 LG Chemicals and Lotte Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Lotte Reit Co, you can compare the effects of market volatilities on LG Chemicals and Lotte Reit 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 LG Chemicals with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Lotte Reit.
Diversification Opportunities for LG Chemicals and Lotte Reit
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051910 and Lotte is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit and LG Chemicals 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 LG Chemicals are associated (or correlated) with Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of LG Chemicals i.e., LG Chemicals and Lotte Reit go up and down completely randomly.
Pair Corralation between LG Chemicals and Lotte Reit
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Lotte Reit. In addition to that, LG Chemicals is 1.94 times more volatile than Lotte Reit Co. It trades about -0.09 of its total potential returns per unit of risk. Lotte Reit Co is currently generating about -0.01 per unit of volatility. If you would invest 340,042 in Lotte Reit Co on September 12, 2024 and sell it today you would lose (31,542) from holding Lotte Reit Co or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.71% |
| Values | Daily Returns |
LG Chemicals vs. Lotte Reit Co
Performance |
| Timeline |
| LG Chemicals |
| Lotte Reit |
LG Chemicals and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Lotte Reit
The main advantage of trading using opposite LG Chemicals and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Lotte Reit 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 Reit will offset losses from the drop in Lotte Reit's long position.| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
| Lotte Reit vs. KTB Investment Securities | Lotte Reit vs. Samhyun Steel Co | Lotte Reit vs. Dongbu Steel Co | Lotte Reit vs. DSC Investment |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |