Correlation Between Youngchang Chemical and Lotte Rental
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Lotte Rental 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 Youngchang Chemical and Lotte Rental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Youngchang Chemical Co and Lotte Rental Co, you can compare the effects of market volatilities on Youngchang Chemical and Lotte Rental 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 Youngchang Chemical with a short position of Lotte Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Lotte Rental.
Diversification Opportunities for Youngchang Chemical and Lotte Rental
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Youngchang and Lotte is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Lotte Rental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Rental and Youngchang Chemical 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 Youngchang Chemical Co are associated (or correlated) with Lotte Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Rental has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Lotte Rental go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Lotte Rental
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 4.59 times more return on investment than Lotte Rental. However, Youngchang Chemical is 4.59 times more volatile than Lotte Rental Co. It trades about 0.39 of its potential returns per unit of risk. Lotte Rental Co is currently generating about -0.23 per unit of risk. If you would invest 1,446,000 in Youngchang Chemical Co on November 7, 2024 and sell it today you would earn a total of 669,000 from holding Youngchang Chemical Co or generate 46.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Youngchang Chemical Co vs. Lotte Rental Co
Performance |
| Timeline |
| Youngchang Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Lotte Rental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Youngchang Chemical and Lotte Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Lotte Rental
The main advantage of trading using opposite Youngchang Chemical and Lotte Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Lotte Rental 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 Rental will offset losses from the drop in Lotte Rental's long position.| Youngchang Chemical vs. Samsung Life Insurance | Youngchang Chemical vs. SKONEC Entertainment Co | Youngchang Chemical vs. Posco Chemical Co | Youngchang Chemical vs. T3 Entertainment Co |
| Lotte Rental vs. Polaris Office Corp | Lotte Rental vs. Dongbang Transport Logistics | Lotte Rental vs. Ilji Technology Co | Lotte Rental vs. People Technology |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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