Correlation Between Lotte Rental and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and Samsung Life 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 Samsung Life 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 Samsung Life Insurance, you can compare the effects of market volatilities on Lotte Rental and Samsung Life 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 Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and Samsung Life.
Diversification Opportunities for Lotte Rental and Samsung Life
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Samsung is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of Lotte Rental i.e., Lotte Rental and Samsung Life go up and down completely randomly.
Pair Corralation between Lotte Rental and Samsung Life
Assuming the 90 days trading horizon Lotte Rental Co is expected to under-perform the Samsung Life. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Rental Co is 1.17 times less risky than Samsung Life. The stock trades about -0.07 of its potential returns per unit of risk. The Samsung Life Insurance is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 9,800,000 in Samsung Life Insurance on October 24, 2024 and sell it today you would lose (1,220,000) from holding Samsung Life Insurance or give up 12.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Rental Co vs. Samsung Life Insurance
Performance |
| Timeline |
| Lotte Rental |
| Samsung Life Insurance |
Lotte Rental and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and Samsung Life
The main advantage of trading using opposite Lotte Rental and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life'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 |
| Samsung Life vs. ENF Technology Co | Samsung Life vs. Sajo Seafood | Samsung Life vs. Foodnamoo | Samsung Life vs. Sam Yang Foods |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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