Correlation Between Daewoo SBI and Lotte Corp
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and Lotte Corp 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 Daewoo SBI and Lotte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Lotte Corp, you can compare the effects of market volatilities on Daewoo SBI and Lotte Corp 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 Daewoo SBI with a short position of Lotte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Lotte Corp.
Diversification Opportunities for Daewoo SBI and Lotte Corp
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daewoo and Lotte is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Lotte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Corp and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Lotte Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Corp has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Lotte Corp go up and down completely randomly.
Pair Corralation between Daewoo SBI and Lotte Corp
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Lotte Corp. In addition to that, Daewoo SBI is 1.12 times more volatile than Lotte Corp. It trades about -0.06 of its total potential returns per unit of risk. Lotte Corp is currently generating about -0.04 per unit of volatility. If you would invest 3,125,910 in Lotte Corp on September 3, 2024 and sell it today you would lose (1,035,910) from holding Lotte Corp or give up 33.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Lotte Corp
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Lotte Corp |
Daewoo SBI and Lotte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Lotte Corp
The main advantage of trading using opposite Daewoo SBI and Lotte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, Lotte Corp 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 Corp will offset losses from the drop in Lotte Corp's long position.| Daewoo SBI vs. Daejoo Electronic Materials | Daewoo SBI vs. Mgame Corp | Daewoo SBI vs. Kakao Games Corp | Daewoo SBI vs. Iljin Materials Co |
| Lotte Corp vs. Asiana Airlines | Lotte Corp vs. Korea Information Communications | Lotte Corp vs. DONGKUK TED METAL | Lotte Corp vs. Mobile Appliance |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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