Correlation Between NewFlex Technology and Lotte Rental
Can any of the company-specific risk be diversified away by investing in both NewFlex Technology and Lotte Rental 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 NewFlex Technology and Lotte Rental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewFlex Technology Co and Lotte Rental Co, you can compare the effects of market volatilities on NewFlex Technology and Lotte Rental 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 NewFlex Technology with a short position of Lotte Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and Lotte Rental.
Diversification Opportunities for NewFlex Technology and Lotte Rental
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NewFlex and Lotte is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and Lotte Rental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Rental and NewFlex Technology 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 NewFlex Technology Co are associated (or correlated) with Lotte Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Rental has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and Lotte Rental go up and down completely randomly.
Pair Corralation between NewFlex Technology and Lotte Rental
Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the Lotte Rental. In addition to that, NewFlex Technology is 2.64 times more volatile than Lotte Rental Co. It trades about -0.32 of its total potential returns per unit of risk. Lotte Rental Co is currently generating about -0.32 per unit of volatility. If you would invest 3,020,000 in Lotte Rental Co on November 6, 2024 and sell it today you would lose (210,000) from holding Lotte Rental Co or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewFlex Technology Co vs. Lotte Rental Co
Performance |
| Timeline |
| NewFlex Technology |
| Lotte Rental |
NewFlex Technology and Lotte Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewFlex Technology and Lotte Rental
The main advantage of trading using opposite NewFlex Technology and Lotte Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewFlex Technology position performs unexpectedly, Lotte Rental 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 Rental will offset losses from the drop in Lotte Rental's long position.| NewFlex Technology vs. Samsung Electronics Co | NewFlex Technology vs. Samsung Electronics Co | NewFlex Technology vs. Hyundai Motor Co | NewFlex Technology vs. Hyundai Motor |
| Lotte Rental vs. Samsung Electronics Co | Lotte Rental vs. Samsung Electronics Co | Lotte Rental vs. LG Energy Solution | Lotte Rental vs. SK Hynix |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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