Correlation Between Seoam Machinery and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery 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 Seoam Machinery and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoam Machinery Industry and Lotte Non Life Insurance, you can compare the effects of market volatilities on Seoam Machinery 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 Seoam Machinery with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and Lotte Non.
Diversification Opportunities for Seoam Machinery and Lotte Non
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seoam and Lotte is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry 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 Seoam Machinery 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 Seoam Machinery Industry 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 Seoam Machinery i.e., Seoam Machinery and Lotte Non go up and down completely randomly.
Pair Corralation between Seoam Machinery and Lotte Non
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 1.02 times more return on investment than Lotte Non. However, Seoam Machinery is 1.02 times more volatile than Lotte Non Life Insurance. It trades about -0.03 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about -0.18 per unit of risk. If you would invest 380,500 in Seoam Machinery Industry on September 5, 2024 and sell it today you would lose (9,500) from holding Seoam Machinery Industry or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoam Machinery Industry vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Seoam Machinery Industry |
| Lotte Non Life |
Seoam Machinery and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and Lotte Non
The main advantage of trading using opposite Seoam Machinery and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery 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.| Seoam Machinery vs. CS BEARING CoLtd | Seoam Machinery vs. DAEMO Engineering Co | Seoam Machinery vs. Haisung TPC Co | Seoam Machinery vs. Booster Co |
| Lotte Non vs. Seoam Machinery Industry | Lotte Non vs. Dongwoo Farm To | Lotte Non vs. ENERGYMACHINERY KOREA CoLtd | Lotte Non vs. Samick Musical Instruments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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