Correlation Between System and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both System 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 System and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and Lotte Chilsung Beverage, you can compare the effects of market volatilities on System 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 System with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Lotte Chilsung.
Diversification Opportunities for System and Lotte Chilsung
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between System and Lotte is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding System and Application 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 System 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 System and Application 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 System i.e., System and Lotte Chilsung go up and down completely randomly.
Pair Corralation between System and Lotte Chilsung
Assuming the 90 days trading horizon System and Application is expected to generate 1.84 times more return on investment than Lotte Chilsung. However, System is 1.84 times more volatile than Lotte Chilsung Beverage. It trades about 0.0 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.04 per unit of risk. If you would invest 206,055 in System and Application on October 14, 2024 and sell it today you would lose (39,455) from holding System and Application or give up 19.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| System and Application |
| Lotte Chilsung Beverage |
System and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and Lotte Chilsung
The main advantage of trading using opposite System and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System 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.| System vs. DSC Investment | System vs. SV Investment | System vs. DB Financial Investment | System vs. Korea Air Svc |
| Lotte Chilsung vs. System and Application | Lotte Chilsung vs. Hanshin Construction Co | Lotte Chilsung vs. Dongbang Transport Logistics | Lotte Chilsung vs. Daou Data Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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