Correlation Between Lotte Rental and Shinil Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and Shinil Electronics 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 Lotte Rental and Shinil Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Rental Co and Shinil Electronics Co, you can compare the effects of market volatilities on Lotte Rental and Shinil Electronics 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 Lotte Rental with a short position of Shinil Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and Shinil Electronics.
Diversification Opportunities for Lotte Rental and Shinil Electronics
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Shinil is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and Shinil Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Electronics and Lotte Rental 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 Lotte Rental Co are associated (or correlated) with Shinil Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Electronics has no effect on the direction of Lotte Rental i.e., Lotte Rental and Shinil Electronics go up and down completely randomly.
Pair Corralation between Lotte Rental and Shinil Electronics
Assuming the 90 days trading horizon Lotte Rental Co is expected to generate 1.54 times more return on investment than Shinil Electronics. However, Lotte Rental is 1.54 times more volatile than Shinil Electronics Co. It trades about -0.01 of its potential returns per unit of risk. Shinil Electronics Co is currently generating about -0.04 per unit of risk. If you would invest 3,020,000 in Lotte Rental Co on October 14, 2024 and sell it today you would lose (95,000) from holding Lotte Rental Co or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Rental Co vs. Shinil Electronics Co
Performance |
| Timeline |
| Lotte Rental |
| Shinil Electronics |
Lotte Rental and Shinil Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and Shinil Electronics
The main advantage of trading using opposite Lotte Rental and Shinil Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, Shinil Electronics 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 Shinil Electronics will offset losses from the drop in Shinil Electronics' long position.| Lotte Rental vs. Samsung Electronics Co | Lotte Rental vs. Samsung Electronics Co | Lotte Rental vs. LG Energy Solution | Lotte Rental vs. SK Hynix |
| Shinil Electronics vs. Samji Electronics Co | Shinil Electronics vs. ABCO Electronics Co | Shinil Electronics vs. Lotte Rental Co | Shinil Electronics vs. SungMoon Electronics Co |
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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