Correlation Between Lotte Data and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Data and PJ Electronics 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 PJ Electronics 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 PJ Electronics Co, you can compare the effects of market volatilities on Lotte Data and PJ Electronics 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 PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and PJ Electronics.
Diversification Opportunities for Lotte Data and PJ Electronics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and 006140 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics 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 PJ Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Electronics has no effect on the direction of Lotte Data i.e., Lotte Data and PJ Electronics go up and down completely randomly.
Pair Corralation between Lotte Data and PJ Electronics
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the PJ Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.83 times less risky than PJ Electronics. The stock trades about -0.26 of its potential returns per unit of risk. The PJ Electronics Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 488,500 in PJ Electronics Co on November 5, 2024 and sell it today you would earn a total of 41,500 from holding PJ Electronics Co or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. PJ Electronics Co
Performance |
| Timeline |
| Lotte Data Communication |
| PJ Electronics |
Lotte Data and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and PJ Electronics
The main advantage of trading using opposite Lotte Data and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, PJ Electronics 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 PJ Electronics will offset losses from the drop in PJ Electronics' long position.| Lotte Data vs. Yura Tech Co | Lotte Data vs. Woori Technology | Lotte Data vs. Korea Information Engineering | Lotte Data vs. FNSTech Co |
| PJ Electronics vs. Sejong Telecom | PJ Electronics vs. Alton Sports CoLtd | PJ Electronics vs. PlayD Co | PJ Electronics vs. Daishin Information Communications |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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