Correlation Between Sangshin Electronics and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Sangshin Electronics 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 Sangshin Electronics and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangshin Electronics Co and Lotte Data Communication, you can compare the effects of market volatilities on Sangshin Electronics 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 Sangshin Electronics with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangshin Electronics and Lotte Data.
Diversification Opportunities for Sangshin Electronics and Lotte Data
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sangshin and Lotte is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sangshin Electronics 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 Sangshin Electronics 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 Sangshin Electronics 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 Sangshin Electronics i.e., Sangshin Electronics and Lotte Data go up and down completely randomly.
Pair Corralation between Sangshin Electronics and Lotte Data
Assuming the 90 days trading horizon Sangshin Electronics Co is expected to generate 0.71 times more return on investment than Lotte Data. However, Sangshin Electronics Co is 1.41 times less risky than Lotte Data. It trades about -0.1 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.25 per unit of risk. If you would invest 327,000 in Sangshin Electronics Co on August 28, 2024 and sell it today you would lose (35,000) from holding Sangshin Electronics Co or give up 10.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sangshin Electronics Co vs. Lotte Data Communication
Performance |
| Timeline |
| Sangshin Electronics |
| Lotte Data Communication |
Sangshin Electronics and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sangshin Electronics and Lotte Data
The main advantage of trading using opposite Sangshin Electronics and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangshin Electronics 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.| Sangshin Electronics vs. Daejoo Electronic Materials | Sangshin Electronics vs. Parksystems Corp | Sangshin Electronics vs. BH Co | Sangshin Electronics vs. Partron Co |
| Lotte Data vs. Daeduck Electronics Co | Lotte Data vs. Anam Electronics Co | Lotte Data vs. Nable Communications | 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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