Correlation Between Lotte Data and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Dongbang Transport 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 Dongbang Transport 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 Dongbang Transport Logistics, you can compare the effects of market volatilities on Lotte Data and Dongbang Transport 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 Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Dongbang Transport.
Diversification Opportunities for Lotte Data and Dongbang Transport
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Dongbang is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport 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 Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Lotte Data i.e., Lotte Data and Dongbang Transport go up and down completely randomly.
Pair Corralation between Lotte Data and Dongbang Transport
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.37 times more return on investment than Dongbang Transport. However, Lotte Data is 1.37 times more volatile than Dongbang Transport Logistics. It trades about 0.07 of its potential returns per unit of risk. Dongbang Transport Logistics is currently generating about 0.07 per unit of risk. If you would invest 1,937,000 in Lotte Data Communication on October 29, 2024 and sell it today you would earn a total of 45,000 from holding Lotte Data Communication or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Lotte Data Communication |
| Dongbang Transport |
Lotte Data and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Dongbang Transport
The main advantage of trading using opposite Lotte Data and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Dongbang Transport 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 Dongbang Transport will offset losses from the drop in Dongbang Transport's long position.| Lotte Data vs. Hyundai Home Shopping | Lotte Data vs. Daejung Chemicals Metals | Lotte Data vs. Hansol Homedeco Co | Lotte Data vs. Homecast CoLtd |
| Dongbang Transport vs. Daewon Media Co | Dongbang Transport vs. KT Submarine Telecom | Dongbang Transport vs. Digital Power Communications | Dongbang Transport vs. Next Entertainment World |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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