Correlation Between Wonbang Tech and Lotte Non-Life
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Lotte Non-Life 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 Wonbang Tech and Lotte Non-Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonbang Tech Co and Lotte Non Life, you can compare the effects of market volatilities on Wonbang Tech and Lotte Non-Life 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 Wonbang Tech with a short position of Lotte Non-Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Lotte Non-Life.
Diversification Opportunities for Wonbang Tech and Lotte Non-Life
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wonbang and Lotte is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co 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 Wonbang Tech 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 Wonbang Tech Co are associated (or correlated) with Lotte Non-Life. 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 Wonbang Tech i.e., Wonbang Tech and Lotte Non-Life go up and down completely randomly.
Pair Corralation between Wonbang Tech and Lotte Non-Life
Assuming the 90 days trading horizon Wonbang Tech Co is expected to under-perform the Lotte Non-Life. In addition to that, Wonbang Tech is 1.07 times more volatile than Lotte Non Life. It trades about -0.11 of its total potential returns per unit of risk. Lotte Non Life is currently generating about -0.04 per unit of volatility. If you would invest 207,500 in Lotte Non Life on September 13, 2024 and sell it today you would lose (7,500) from holding Lotte Non Life or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonbang Tech Co vs. Lotte Non Life
Performance |
| Timeline |
| Wonbang Tech |
| Lotte Non Life |
Wonbang Tech and Lotte Non-Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and Lotte Non-Life
The main advantage of trading using opposite Wonbang Tech and Lotte Non-Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, Lotte Non-Life 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-Life will offset losses from the drop in Lotte Non-Life's long position.| Wonbang Tech vs. Samsung Electronics Co | Wonbang Tech vs. Samsung Electronics Co | Wonbang Tech vs. LG Energy Solution | Wonbang Tech vs. SK Hynix |
| Lotte Non-Life vs. KB Financial Group | Lotte Non-Life vs. Shinhan Financial Group | Lotte Non-Life vs. Hana Financial | Lotte Non-Life vs. Woori Financial Group |
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.
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