Correlation Between Lotte Rental and Samwon Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and Samwon Steel 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 Samwon Steel 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 Samwon Steel, you can compare the effects of market volatilities on Lotte Rental and Samwon Steel 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 Samwon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and Samwon Steel.
Diversification Opportunities for Lotte Rental and Samwon Steel
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Samwon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and Samwon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samwon Steel 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 Samwon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samwon Steel has no effect on the direction of Lotte Rental i.e., Lotte Rental and Samwon Steel go up and down completely randomly.
Pair Corralation between Lotte Rental and Samwon Steel
Assuming the 90 days trading horizon Lotte Rental Co is expected to under-perform the Samwon Steel. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Rental Co is 1.12 times less risky than Samwon Steel. The stock trades about -0.33 of its potential returns per unit of risk. The Samwon Steel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 240,500 in Samwon Steel on October 24, 2024 and sell it today you would earn a total of 1,500 from holding Samwon Steel or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Rental Co vs. Samwon Steel
Performance |
| Timeline |
| Lotte Rental |
| Samwon Steel |
Lotte Rental and Samwon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and Samwon Steel
The main advantage of trading using opposite Lotte Rental and Samwon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, Samwon Steel 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 Samwon Steel will offset losses from the drop in Samwon Steel'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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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