Correlation Between Daechang Steel and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and Lotte Data 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 Daechang Steel and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daechang Steel Co and Lotte Data Communication, you can compare the effects of market volatilities on Daechang Steel and Lotte Data 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 Daechang Steel with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and Lotte Data.
Diversification Opportunities for Daechang Steel and Lotte Data
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daechang and Lotte is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and Daechang Steel 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 Daechang Steel Co are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Daechang Steel i.e., Daechang Steel and Lotte Data go up and down completely randomly.
Pair Corralation between Daechang Steel and Lotte Data
Assuming the 90 days trading horizon Daechang Steel Co is expected to under-perform the Lotte Data. But the stock apears to be less risky and, when comparing its historical volatility, Daechang Steel Co is 1.94 times less risky than Lotte Data. The stock trades about -0.02 of its potential returns per unit of risk. The Lotte Data Communication is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,555,154 in Lotte Data Communication on October 16, 2024 and sell it today you would lose (515,154) from holding Lotte Data Communication or give up 20.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. Lotte Data Communication
Performance |
| Timeline |
| Daechang Steel |
| Lotte Data Communication |
Daechang Steel and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and Lotte Data
The main advantage of trading using opposite Daechang Steel and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| Daechang Steel vs. Duksan Hi Metal | Daechang Steel vs. DSC Investment | Daechang Steel vs. DB Financial Investment | Daechang Steel vs. Kukil Metal Co |
| Lotte Data vs. Daechang Steel Co | Lotte Data vs. Hankuk Steel Wire | Lotte Data vs. Han Kook Steel | Lotte Data vs. LG Household Healthcare |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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