Correlation Between Lotte Data and DB Insurance
Can any of the company-specific risk be diversified away by investing in both Lotte Data and DB Insurance 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 DB Insurance 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 DB Insurance Co, you can compare the effects of market volatilities on Lotte Data and DB Insurance 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 DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and DB Insurance.
Diversification Opportunities for Lotte Data and DB Insurance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and 005830 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance 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 DB Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Insurance has no effect on the direction of Lotte Data i.e., Lotte Data and DB Insurance go up and down completely randomly.
Pair Corralation between Lotte Data and DB Insurance
Assuming the 90 days trading horizon Lotte Data is expected to generate 5.44 times less return on investment than DB Insurance. In addition to that, Lotte Data is 1.32 times more volatile than DB Insurance Co. It trades about 0.01 of its total potential returns per unit of risk. DB Insurance Co is currently generating about 0.07 per unit of volatility. If you would invest 5,575,021 in DB Insurance Co on September 3, 2024 and sell it today you would earn a total of 5,344,979 from holding DB Insurance Co or generate 95.87% 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. DB Insurance Co
Performance |
| Timeline |
| Lotte Data Communication |
| DB Insurance |
Lotte Data and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and DB Insurance
The main advantage of trading using opposite Lotte Data and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, DB Insurance 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 DB Insurance will offset losses from the drop in DB Insurance'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 |
| DB Insurance vs. Playgram Co | DB Insurance vs. National Plastic Co | DB Insurance vs. Grand Korea Leisure | DB Insurance vs. EV Advanced Material |
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 Directory module to find actively traded commodities issued by global exchanges.
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