Correlation Between Lotte Rental and SEOWONINTECHCoLtd
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd, you can compare the effects of market volatilities on Lotte Rental and SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and SEOWONINTECHCoLtd.
Diversification Opportunities for Lotte Rental and SEOWONINTECHCoLtd
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and SEOWONINTECHCoLtd is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and SEOWONINTECHCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOWONINTECHCoLtd has no effect on the direction of Lotte Rental i.e., Lotte Rental and SEOWONINTECHCoLtd go up and down completely randomly.
Pair Corralation between Lotte Rental and SEOWONINTECHCoLtd
Assuming the 90 days trading horizon Lotte Rental Co is expected to generate 2.2 times more return on investment than SEOWONINTECHCoLtd. However, Lotte Rental is 2.2 times more volatile than SEOWONINTECHCoLtd. It trades about 0.02 of its potential returns per unit of risk. SEOWONINTECHCoLtd is currently generating about -0.01 per unit of risk. If you would invest 2,705,000 in Lotte Rental Co on November 8, 2024 and sell it today you would earn a total of 125,000 from holding Lotte Rental Co or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Rental Co vs. SEOWONINTECHCoLtd
Performance |
| Timeline |
| Lotte Rental |
| SEOWONINTECHCoLtd |
Lotte Rental and SEOWONINTECHCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and SEOWONINTECHCoLtd
The main advantage of trading using opposite Lotte Rental and SEOWONINTECHCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd will offset losses from the drop in SEOWONINTECHCoLtd's long position.| Lotte Rental vs. KyungIn Electronics Co | Lotte Rental vs. Samji Electronics Co | Lotte Rental vs. GS Retail Co | Lotte Rental vs. Vissem Electronics Co |
| SEOWONINTECHCoLtd vs. Dongil Steel Co | SEOWONINTECHCoLtd vs. Daol Investment Securities | SEOWONINTECHCoLtd vs. Atinum Investment Co | SEOWONINTECHCoLtd vs. BooKook Steel 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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