Correlation Between Lotte Rental and Handok Clean
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and Handok Clean 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 Handok Clean 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 Handok Clean Tech, you can compare the effects of market volatilities on Lotte Rental and Handok Clean 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 Handok Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and Handok Clean.
Diversification Opportunities for Lotte Rental and Handok Clean
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lotte and Handok is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and Handok Clean Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handok Clean Tech 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 Handok Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handok Clean Tech has no effect on the direction of Lotte Rental i.e., Lotte Rental and Handok Clean go up and down completely randomly.
Pair Corralation between Lotte Rental and Handok Clean
Assuming the 90 days trading horizon Lotte Rental Co is expected to under-perform the Handok Clean. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Rental Co is 1.41 times less risky than Handok Clean. The stock trades about -0.23 of its potential returns per unit of risk. The Handok Clean Tech is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 630,000 in Handok Clean Tech on November 7, 2024 and sell it today you would lose (6,000) from holding Handok Clean Tech or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lotte Rental Co vs. Handok Clean Tech
Performance |
| Timeline |
| Lotte Rental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Handok Clean Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lotte Rental and Handok Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and Handok Clean
The main advantage of trading using opposite Lotte Rental and Handok Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, Handok Clean 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 Handok Clean will offset losses from the drop in Handok Clean's long position.| Lotte Rental vs. Polaris Office Corp | Lotte Rental vs. Dongbang Transport Logistics | Lotte Rental vs. Ilji Technology Co | Lotte Rental vs. People Technology |
| Handok Clean vs. Miwon Chemicals Co | Handok Clean vs. Jeju Bank | Handok Clean vs. MediaZen | Handok Clean vs. SAMG Entertainment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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