Correlation Between Lotte Rental and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and Kukdo Chemical 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 Kukdo Chemical 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 Kukdo Chemical Co, you can compare the effects of market volatilities on Lotte Rental and Kukdo Chemical 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 Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and Kukdo Chemical.
Diversification Opportunities for Lotte Rental and Kukdo Chemical
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Kukdo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical 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 Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Lotte Rental i.e., Lotte Rental and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Lotte Rental and Kukdo Chemical
Assuming the 90 days trading horizon Lotte Rental Co is expected to generate 0.69 times more return on investment than Kukdo Chemical. However, Lotte Rental Co is 1.44 times less risky than Kukdo Chemical. It trades about 0.0 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 2,835,000 in Lotte Rental Co on October 24, 2024 and sell it today you would lose (70,000) from holding Lotte Rental Co or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Rental Co vs. Kukdo Chemical Co
Performance |
| Timeline |
| Lotte Rental |
| Kukdo Chemical |
Lotte Rental and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and Kukdo Chemical
The main advantage of trading using opposite Lotte Rental and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's 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 |
| Kukdo Chemical vs. Hyundai Home Shopping | Kukdo Chemical vs. Hansol Homedeco Co | Kukdo Chemical vs. Songwon Industrial Co | Kukdo Chemical vs. Daiyang Metal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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