Correlation Between Lotte Data and Daejoo
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Daejoo 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 Lotte Data and Daejoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Data Communication and Daejoo Inc, you can compare the effects of market volatilities on Lotte Data and Daejoo 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 Lotte Data with a short position of Daejoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Daejoo.
Diversification Opportunities for Lotte Data and Daejoo
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Daejoo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Daejoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Inc and Lotte Data 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 Lotte Data Communication are associated (or correlated) with Daejoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Inc has no effect on the direction of Lotte Data i.e., Lotte Data and Daejoo go up and down completely randomly.
Pair Corralation between Lotte Data and Daejoo
Assuming the 90 days trading horizon Lotte Data is expected to generate 5.48 times less return on investment than Daejoo. In addition to that, Lotte Data is 1.17 times more volatile than Daejoo Inc. It trades about 0.03 of its total potential returns per unit of risk. Daejoo Inc is currently generating about 0.19 per unit of volatility. If you would invest 144,900 in Daejoo Inc on November 3, 2024 and sell it today you would earn a total of 8,100 from holding Daejoo Inc or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Daejoo Inc
Performance |
| Timeline |
| Lotte Data Communication |
| Daejoo Inc |
Lotte Data and Daejoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Daejoo
The main advantage of trading using opposite Lotte Data and Daejoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Daejoo 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 Daejoo will offset losses from the drop in Daejoo's long position.| Lotte Data vs. GS Engineering Construction | Lotte Data vs. Keyang Electric Machinery | Lotte Data vs. Nable Communications | Lotte Data vs. Seohee Construction Co |
| Daejoo vs. Kyeryong Construction Industrial | Daejoo vs. Iljin Display | Daejoo vs. Sangsin Energy Display | Daejoo vs. SEOJEON ELECTRIC MACHINERY |
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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