Correlation Between Lotte Data and HMM
Can any of the company-specific risk be diversified away by investing in both Lotte Data and HMM 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 HMM 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 HMM Co, you can compare the effects of market volatilities on Lotte Data and HMM 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 HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and HMM.
Diversification Opportunities for Lotte Data and HMM
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and HMM is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co 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 HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Lotte Data i.e., Lotte Data and HMM go up and down completely randomly.
Pair Corralation between Lotte Data and HMM
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 0.58 times more return on investment than HMM. However, Lotte Data Communication is 1.71 times less risky than HMM. It trades about 0.26 of its potential returns per unit of risk. HMM Co is currently generating about 0.14 per unit of risk. If you would invest 1,954,000 in Lotte Data Communication on November 27, 2024 and sell it today you would earn a total of 111,000 from holding Lotte Data Communication or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. HMM Co
Performance |
| Timeline |
| Lotte Data Communication |
| HMM Co |
Lotte Data and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and HMM
The main advantage of trading using opposite Lotte Data and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| Lotte Data vs. Aprogen Healthcare Games | Lotte Data vs. WONIK Materials CoLtd | Lotte Data vs. Iljin Materials Co | Lotte Data 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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