Correlation Between Lotte Data and Eagon Industrial
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Eagon Industrial 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 Eagon Industrial 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 Eagon Industrial Co, you can compare the effects of market volatilities on Lotte Data and Eagon Industrial 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 Eagon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Eagon Industrial.
Diversification Opportunities for Lotte Data and Eagon Industrial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Eagon is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon 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 Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of Lotte Data i.e., Lotte Data and Eagon Industrial go up and down completely randomly.
Pair Corralation between Lotte Data and Eagon Industrial
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.51 times more return on investment than Eagon Industrial. However, Lotte Data is 1.51 times more volatile than Eagon Industrial Co. It trades about 0.26 of its potential returns per unit of risk. Eagon Industrial Co is currently generating about 0.02 per unit of risk. If you would invest 1,850,000 in Lotte Data Communication on October 11, 2024 and sell it today you would earn a total of 205,000 from holding Lotte Data Communication or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Eagon Industrial Co
Performance |
| Timeline |
| Lotte Data Communication |
| Eagon Industrial |
Lotte Data and Eagon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Eagon Industrial
The main advantage of trading using opposite Lotte Data and Eagon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Eagon Industrial 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 Eagon Industrial will offset losses from the drop in Eagon Industrial's long position.| Lotte Data vs. InnoTherapy | Lotte Data vs. LG Display Co | Lotte Data vs. Jeju Beer Co | Lotte Data vs. Daejung Chemicals Metals |
| Eagon Industrial vs. Jeil Steel Mfg | Eagon Industrial vs. J Steel Co | Eagon Industrial vs. Cuckoo Electronics Co | Eagon Industrial vs. KyungIn Electronics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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