Correlation Between Netmarble Games and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Netmarble Games 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 Netmarble Games and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netmarble Games Corp and Lotte Chemical Corp, you can compare the effects of market volatilities on Netmarble Games 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 Netmarble Games with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netmarble Games and Lotte Chemical.
Diversification Opportunities for Netmarble Games and Lotte Chemical
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Netmarble and Lotte is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Netmarble Games Corp 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 Netmarble Games 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 Netmarble Games Corp 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 Netmarble Games i.e., Netmarble Games and Lotte Chemical go up and down completely randomly.
Pair Corralation between Netmarble Games and Lotte Chemical
Assuming the 90 days trading horizon Netmarble Games Corp is expected to under-perform the Lotte Chemical. In addition to that, Netmarble Games is 1.2 times more volatile than Lotte Chemical Corp. It trades about -0.39 of its total potential returns per unit of risk. Lotte Chemical Corp is currently generating about -0.13 per unit of volatility. If you would invest 6,160,000 in Lotte Chemical Corp on October 25, 2024 and sell it today you would lose (250,000) from holding Lotte Chemical Corp or give up 4.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netmarble Games Corp vs. Lotte Chemical Corp
Performance |
| Timeline |
| Netmarble Games Corp |
| Lotte Chemical Corp |
Netmarble Games and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netmarble Games and Lotte Chemical
The main advantage of trading using opposite Netmarble Games and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netmarble Games 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.| Netmarble Games vs. Busan Industrial Co | Netmarble Games vs. Busan Ind | Netmarble Games vs. RPBio Inc | Netmarble Games vs. Finebesteel |
| Lotte Chemical vs. INNOX Advanced Materials | Lotte Chemical vs. Netmarble Games Corp | Lotte Chemical vs. DoubleU Games Co | Lotte Chemical vs. Lake Materials 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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