Correlation Between Lotte Rental and RF Materials
Can any of the company-specific risk be diversified away by investing in both Lotte Rental and RF Materials 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 RF Materials 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 RF Materials Co, you can compare the effects of market volatilities on Lotte Rental and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Rental and RF Materials.
Diversification Opportunities for Lotte Rental and RF Materials
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and 327260 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Rental Co and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Lotte Rental i.e., Lotte Rental and RF Materials go up and down completely randomly.
Pair Corralation between Lotte Rental and RF Materials
Assuming the 90 days trading horizon Lotte Rental Co is expected to generate 0.48 times more return on investment than RF Materials. However, Lotte Rental Co is 2.07 times less risky than RF Materials. It trades about 0.02 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.05 per unit of risk. If you would invest 2,660,000 in Lotte Rental Co on October 14, 2024 and sell it today you would earn a total of 265,000 from holding Lotte Rental Co or generate 9.96% 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. RF Materials Co
Performance |
| Timeline |
| Lotte Rental |
| RF Materials |
Lotte Rental and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Rental and RF Materials
The main advantage of trading using opposite Lotte Rental and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Rental position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.| Lotte Rental vs. Sangsin Energy Display | Lotte Rental vs. Aprogen Healthcare Games | Lotte Rental vs. Seoul Semiconductor Co | Lotte Rental vs. Alton Sports CoLtd |
| RF Materials vs. Insung Information Co | RF Materials vs. Barunson Entertainment Arts | RF Materials vs. Lotte Rental Co | RF Materials vs. Daishin Information Communications |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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