Correlation Between Lotte Rental and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Lotte Rental and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and Hanjoo Light.
Diversification Opportunities for Lotte Rental and Hanjoo Light
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Hanjoo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Lotte Rental i.e., Lotte Rental and Hanjoo Light go up and down completely randomly.
Pair Corralation between Lotte Rental and Hanjoo Light
Assuming the 90 days trading horizon Lotte Rental Co is expected to under-perform the Hanjoo Light. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Rental Co is 1.13 times less risky than Hanjoo Light. The stock trades about -0.27 of its potential returns per unit of risk. The Hanjoo Light Metal is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 75,600 in Hanjoo Light Metal on October 30, 2024 and sell it today you would earn a total of 4,900 from holding Hanjoo Light Metal or generate 6.48% 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. Hanjoo Light Metal
Performance |
| Timeline |
| Lotte Rental |
| Hanjoo Light Metal |
Lotte Rental and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and Hanjoo Light
The main advantage of trading using opposite Lotte Rental and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Lotte Rental vs. TS Investment Corp | Lotte Rental vs. Samyung Trading Co | Lotte Rental vs. Youngchang Chemical Co | Lotte Rental vs. Korea Petro Chemical |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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