Correlation Between Dongyang and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Dongyang and Lotte Data 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 Dongyang and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongyang EP and Lotte Data Communication, you can compare the effects of market volatilities on Dongyang and Lotte Data 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 Dongyang with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongyang and Lotte Data.
Diversification Opportunities for Dongyang and Lotte Data
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongyang and Lotte is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dongyang EP and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Dongyang 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 Dongyang EP are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Dongyang i.e., Dongyang and Lotte Data go up and down completely randomly.
Pair Corralation between Dongyang and Lotte Data
Assuming the 90 days trading horizon Dongyang EP is expected to generate 0.65 times more return on investment than Lotte Data. However, Dongyang EP is 1.54 times less risky than Lotte Data. It trades about 0.04 of its potential returns per unit of risk. Lotte Data Communication is currently generating about 0.01 per unit of risk. If you would invest 1,409,003 in Dongyang EP on September 2, 2024 and sell it today you would earn a total of 512,997 from holding Dongyang EP or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongyang EP vs. Lotte Data Communication
Performance |
| Timeline |
| Dongyang EP |
| Lotte Data Communication |
Dongyang and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongyang and Lotte Data
The main advantage of trading using opposite Dongyang and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongyang position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Dongyang vs. Digital Power Communications | Dongyang vs. Lotte Data Communication | Dongyang vs. Inzi Display CoLtd | Dongyang vs. Nable Communications |
| Lotte Data vs. Digital Power Communications | Lotte Data vs. Wireless Power Amplifier | Lotte Data vs. Daejung Chemicals Metals | Lotte Data vs. Heungkuk Metaltech CoLtd |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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