Correlation Between Lotte Data and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Seoul Food 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 Seoul Food 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 Seoul Food Industrial, you can compare the effects of market volatilities on Lotte Data and Seoul Food 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 Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Seoul Food.
Diversification Opportunities for Lotte Data and Seoul Food
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Seoul is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial 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 Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Lotte Data i.e., Lotte Data and Seoul Food go up and down completely randomly.
Pair Corralation between Lotte Data and Seoul Food
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Seoul Food. In addition to that, Lotte Data is 1.55 times more volatile than Seoul Food Industrial. It trades about -0.21 of its total potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.1 per unit of volatility. If you would invest 15,500 in Seoul Food Industrial on September 3, 2024 and sell it today you would lose (600.00) from holding Seoul Food Industrial or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Seoul Food Industrial
Performance |
| Timeline |
| Lotte Data Communication |
| Seoul Food Industrial |
Lotte Data and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Seoul Food
The main advantage of trading using opposite Lotte Data and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Lotte Data vs. Seoul Food Industrial | Lotte Data vs. Hannong Chemicals | Lotte Data vs. Sung Bo Chemicals | Lotte Data vs. Samhwa Paint Industrial |
| Seoul Food vs. Neungyule Education | Seoul Food vs. Sangsin Energy Display | Seoul Food vs. FNC Entertainment Co | Seoul Food vs. SKONEC Entertainment 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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