Correlation Between Lotte Data and Ni Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Ni Steel 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 Ni Steel 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 Ni Steel, you can compare the effects of market volatilities on Lotte Data and Ni Steel 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 Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Ni Steel.
Diversification Opportunities for Lotte Data and Ni Steel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and 008260 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel 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 Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Lotte Data i.e., Lotte Data and Ni Steel go up and down completely randomly.
Pair Corralation between Lotte Data and Ni Steel
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.8 times more return on investment than Ni Steel. However, Lotte Data is 1.8 times more volatile than Ni Steel. It trades about -0.01 of its potential returns per unit of risk. Ni Steel is currently generating about -0.07 per unit of risk. If you would invest 2,564,982 in Lotte Data Communication on September 12, 2024 and sell it today you would lose (714,982) from holding Lotte Data Communication or give up 27.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Ni Steel
Performance |
| Timeline |
| Lotte Data Communication |
| Ni Steel |
Lotte Data and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Ni Steel
The main advantage of trading using opposite Lotte Data and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Ni Steel 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 Ni Steel will offset losses from the drop in Ni Steel's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Solution Advanced Technology | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind |
| Ni Steel vs. Lotte Data Communication | Ni Steel vs. Seoul Electronics Telecom | Ni Steel vs. ECSTELECOM Co | Ni Steel vs. Samsung Life Insurance |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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