Correlation Between GenoFocus and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both GenoFocus and Lotte Chemical 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 GenoFocus and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GenoFocus and Lotte Chemical Corp, you can compare the effects of market volatilities on GenoFocus and Lotte Chemical 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 GenoFocus with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GenoFocus and Lotte Chemical.
Diversification Opportunities for GenoFocus and Lotte Chemical
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GenoFocus and Lotte is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GenoFocus and Lotte Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Corp and GenoFocus 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 GenoFocus are associated (or correlated) with Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Corp has no effect on the direction of GenoFocus i.e., GenoFocus and Lotte Chemical go up and down completely randomly.
Pair Corralation between GenoFocus and Lotte Chemical
Assuming the 90 days trading horizon GenoFocus is expected to generate 1.3 times more return on investment than Lotte Chemical. However, GenoFocus is 1.3 times more volatile than Lotte Chemical Corp. It trades about 0.02 of its potential returns per unit of risk. Lotte Chemical Corp is currently generating about -0.07 per unit of risk. If you would invest 400,000 in GenoFocus on September 12, 2024 and sell it today you would earn a total of 13,000 from holding GenoFocus or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
GenoFocus vs. Lotte Chemical Corp
Performance |
| Timeline |
| GenoFocus |
| Lotte Chemical Corp |
GenoFocus and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GenoFocus and Lotte Chemical
The main advantage of trading using opposite GenoFocus and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GenoFocus position performs unexpectedly, Lotte Chemical 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 Chemical will offset losses from the drop in Lotte Chemical's long position.| GenoFocus vs. Netmarble Games Corp | GenoFocus vs. Koh Young Technology | GenoFocus vs. Hwangkum Steel Technology | GenoFocus vs. Daou Technology |
| Lotte Chemical vs. LG Chemicals | Lotte Chemical vs. POSCO Holdings | Lotte Chemical vs. Hanwha Solutions | Lotte Chemical vs. Hyundai Steel |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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