Correlation Between Samsung Biologics and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and Lotte Reit 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 Samsung Biologics and Lotte Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Biologics Co and Lotte Reit Co, you can compare the effects of market volatilities on Samsung Biologics and Lotte Reit 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 Samsung Biologics with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and Lotte Reit.
Diversification Opportunities for Samsung Biologics and Lotte Reit
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Lotte is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit and Samsung Biologics 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 Samsung Biologics Co are associated (or correlated) with Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and Lotte Reit go up and down completely randomly.
Pair Corralation between Samsung Biologics and Lotte Reit
Assuming the 90 days trading horizon Samsung Biologics Co is expected to under-perform the Lotte Reit. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Biologics Co is 1.22 times less risky than Lotte Reit. The stock trades about -0.02 of its potential returns per unit of risk. The Lotte Reit Co is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 280,420 in Lotte Reit Co on October 9, 2024 and sell it today you would earn a total of 33,580 from holding Lotte Reit Co or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Samsung Biologics Co vs. Lotte Reit Co
Performance |
| Timeline |
| Samsung Biologics |
| Lotte Reit |
Samsung Biologics and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Biologics and Lotte Reit
The main advantage of trading using opposite Samsung Biologics and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Biologics position performs unexpectedly, Lotte Reit 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 Reit will offset losses from the drop in Lotte Reit's long position.| Samsung Biologics vs. Miwon Chemicals Co | Samsung Biologics vs. Hironic Co | Samsung Biologics vs. Samhyun Steel Co | Samsung Biologics vs. Hannong Chemicals |
| Lotte Reit vs. Ssangyong Information Communication | Lotte Reit vs. Samsung Electronics Co | Lotte Reit vs. Daeduck Electronics Co | Lotte Reit vs. Digital Power Communications |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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