Correlation Between Dongwoo Farm and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm 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 Dongwoo Farm and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Lotte Data Communication, you can compare the effects of market volatilities on Dongwoo Farm 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 Dongwoo Farm with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Lotte Data.
Diversification Opportunities for Dongwoo Farm and Lotte Data
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwoo and Lotte is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To 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 Dongwoo Farm 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 Dongwoo Farm To 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 Dongwoo Farm i.e., Dongwoo Farm and Lotte Data go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Lotte Data
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.47 times more return on investment than Lotte Data. However, Dongwoo Farm To is 2.11 times less risky than Lotte Data. It trades about 0.14 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 190,997 in Dongwoo Farm To on October 25, 2024 and sell it today you would earn a total of 4,503 from holding Dongwoo Farm To or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Lotte Data Communication
Performance |
| Timeline |
| Dongwoo Farm To |
| Lotte Data Communication |
Dongwoo Farm and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Lotte Data
The main advantage of trading using opposite Dongwoo Farm and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm 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.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wing Yip Food |
| Lotte Data vs. SK Holdings Co | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind | Lotte Data vs. RPBio Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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