Correlation Between Cheryong Industrial and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Lotte Fine 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 Cheryong Industrial and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Lotte Fine Chemical, you can compare the effects of market volatilities on Cheryong Industrial and Lotte Fine 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 Cheryong Industrial with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Lotte Fine.
Diversification Opportunities for Cheryong Industrial and Lotte Fine
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheryong and Lotte is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Lotte Fine go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Lotte Fine
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the Lotte Fine. In addition to that, Cheryong Industrial is 1.3 times more volatile than Lotte Fine Chemical. It trades about 0.0 of its total potential returns per unit of risk. Lotte Fine Chemical is currently generating about 0.1 per unit of volatility. If you would invest 3,740,000 in Lotte Fine Chemical on September 15, 2024 and sell it today you would earn a total of 230,000 from holding Lotte Fine Chemical or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Lotte Fine Chemical
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Lotte Fine Chemical |
Cheryong Industrial and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Lotte Fine
The main advantage of trading using opposite Cheryong Industrial and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Lotte Fine 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 Fine will offset losses from the drop in Lotte Fine's long position.| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Solution Advanced Technology | Cheryong Industrial vs. Busan Industrial Co |
| Lotte Fine vs. Infinitt Healthcare Co | Lotte Fine vs. Cheryong Industrial CoLtd | Lotte Fine vs. Woorim Machinery Co | Lotte Fine vs. Songwon Industrial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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