Correlation Between Okins Electronics and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Okins Electronics 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 Okins Electronics and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okins Electronics Co and Lotte Data Communication, you can compare the effects of market volatilities on Okins Electronics 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 Okins Electronics with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okins Electronics and Lotte Data.
Diversification Opportunities for Okins Electronics and Lotte Data
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Okins and Lotte is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Okins Electronics Co 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 Okins Electronics 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 Okins Electronics Co 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 Okins Electronics i.e., Okins Electronics and Lotte Data go up and down completely randomly.
Pair Corralation between Okins Electronics and Lotte Data
Assuming the 90 days trading horizon Okins Electronics Co is expected to under-perform the Lotte Data. But the stock apears to be less risky and, when comparing its historical volatility, Okins Electronics Co is 1.34 times less risky than Lotte Data. The stock trades about -0.67 of its potential returns per unit of risk. The Lotte Data Communication is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 2,280,000 in Lotte Data Communication on September 1, 2024 and sell it today you would lose (290,000) from holding Lotte Data Communication or give up 12.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okins Electronics Co vs. Lotte Data Communication
Performance |
| Timeline |
| Okins Electronics |
| Lotte Data Communication |
Okins Electronics and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okins Electronics and Lotte Data
The main advantage of trading using opposite Okins Electronics and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okins Electronics 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.| Okins Electronics vs. Dongsin Engineering Construction | Okins Electronics vs. Doosan Fuel Cell | Okins Electronics vs. Daishin Balance 1 | Okins Electronics vs. Total Soft Bank |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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