Correlation Between ENERGYMACHINERY KOREA and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and Lotte Chilsung 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 Chilsung 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 Chilsung Beverage, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Lotte Chilsung 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 Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Lotte Chilsung.
Diversification Opportunities for ENERGYMACHINERY KOREA and Lotte Chilsung
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ENERGYMACHINERY and Lotte is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage 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 Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Lotte Chilsung go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Lotte Chilsung
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 1.76 times more return on investment than Lotte Chilsung. However, ENERGYMACHINERY KOREA is 1.76 times more volatile than Lotte Chilsung Beverage. It trades about -0.01 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.06 per unit of risk. If you would invest 311,000 in ENERGYMACHINERY KOREA CoLtd on November 1, 2024 and sell it today you would lose (82,500) from holding ENERGYMACHINERY KOREA CoLtd or give up 26.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Lotte Chilsung Beverage |
ENERGYMACHINERY KOREA and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Lotte Chilsung
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, Lotte Chilsung 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 Chilsung will offset losses from the drop in Lotte Chilsung's long position.| ENERGYMACHINERY KOREA vs. KT Submarine Telecom | ENERGYMACHINERY KOREA vs. FOODWELL Co | ENERGYMACHINERY KOREA vs. Nice Information Telecommunication | ENERGYMACHINERY KOREA vs. Organic Special Pet |
| Lotte Chilsung vs. Haitai Confectionery Foods | Lotte Chilsung vs. Kukdong Oil Chemicals | Lotte Chilsung vs. Sam Yang Foods | Lotte Chilsung vs. DoubleU Games 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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