Correlation Between Histeel and Lotte Non-Life
Can any of the company-specific risk be diversified away by investing in both Histeel 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 Histeel 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 Histeel and Lotte Non Life Insurance, you can compare the effects of market volatilities on Histeel 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 Histeel with a short position of Lotte Non-Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Histeel and Lotte Non-Life.
Diversification Opportunities for Histeel and Lotte Non-Life
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Histeel and Lotte is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Histeel and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Histeel 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 Histeel 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 Histeel i.e., Histeel and Lotte Non-Life go up and down completely randomly.
Pair Corralation between Histeel and Lotte Non-Life
Assuming the 90 days trading horizon Histeel is expected to under-perform the Lotte Non-Life. In addition to that, Histeel is 1.38 times more volatile than Lotte Non Life Insurance. It trades about -0.14 of its total potential returns per unit of risk. Lotte Non Life Insurance is currently generating about -0.15 per unit of volatility. If you would invest 221,000 in Lotte Non Life Insurance on September 12, 2024 and sell it today you would lose (26,300) from holding Lotte Non Life Insurance or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Histeel vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Histeel |
| Lotte Non Life |
Histeel and Lotte Non-Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Histeel and Lotte Non-Life
The main advantage of trading using opposite Histeel and Lotte Non-Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Histeel 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.| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical Corp |
| Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. SK Hynix | Lotte Non-Life vs. POSCO Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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