Correlation Between Lion Chemtech and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech 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 Lion Chemtech and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Lotte Data Communication, you can compare the effects of market volatilities on Lion Chemtech 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 Lion Chemtech with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Lotte Data.
Diversification Opportunities for Lion Chemtech and Lotte Data
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and Lotte is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech i.e., Lion Chemtech and Lotte Data go up and down completely randomly.
Pair Corralation between Lion Chemtech and Lotte Data
Assuming the 90 days trading horizon Lion Chemtech Co is expected to generate 0.94 times more return on investment than Lotte Data. However, Lion Chemtech Co is 1.06 times less risky than Lotte Data. It trades about -0.05 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.23 per unit of risk. If you would invest 259,500 in Lion Chemtech Co on September 5, 2024 and sell it today you would lose (9,500) from holding Lion Chemtech Co or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Lotte Data Communication
Performance |
| Timeline |
| Lion Chemtech |
| Lotte Data Communication |
Lion Chemtech and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Lotte Data
The main advantage of trading using opposite Lion Chemtech and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech 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.The idea behind Lion Chemtech Co and Lotte Data Communication pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lotte Data vs. Sejong Telecom | Lotte Data vs. Shinsegae Information Communication | Lotte Data vs. Shinil Electronics Co | Lotte Data vs. Samwha Electronics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |