Correlation Between ENERGYMACHINERY KOREA and Lotte Non
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and Lotte Non 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 ENERGYMACHINERY KOREA and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Lotte Non Life Insurance, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Lotte Non 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 ENERGYMACHINERY KOREA with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Lotte Non.
Diversification Opportunities for ENERGYMACHINERY KOREA and Lotte Non
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ENERGYMACHINERY and Lotte is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with Lotte Non. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Lotte Non go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Lotte Non
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to under-perform the Lotte Non. But the stock apears to be less risky and, when comparing its historical volatility, ENERGYMACHINERY KOREA CoLtd is 1.03 times less risky than Lotte Non. The stock trades about -0.35 of its potential returns per unit of risk. The Lotte Non Life Insurance is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 233,000 in Lotte Non Life Insurance on September 5, 2024 and sell it today you would lose (24,500) from holding Lotte Non Life Insurance or give up 10.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Lotte Non Life Insurance
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Lotte Non Life |
ENERGYMACHINERY KOREA and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Lotte Non
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, Lotte Non 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 Lotte Non will offset losses from the drop in Lotte Non's long position.| ENERGYMACHINERY KOREA vs. LG Display | ENERGYMACHINERY KOREA vs. Hyundai Motor | ENERGYMACHINERY KOREA vs. Hyundai Motor Co | ENERGYMACHINERY KOREA vs. Hyundai Motor Co |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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