Correlation Between Lotte Data and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Busan 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 Busan 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 Busan Industrial Co, you can compare the effects of market volatilities on Lotte Data and Busan 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Busan Industrial.
Diversification Opportunities for Lotte Data and Busan Industrial
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Busan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Lotte Data i.e., Lotte Data and Busan Industrial go up and down completely randomly.
Pair Corralation between Lotte Data and Busan Industrial
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Busan Industrial. In addition to that, Lotte Data is 1.05 times more volatile than Busan Industrial Co. It trades about 0.0 of its total potential returns per unit of risk. Busan Industrial Co is currently generating about 0.17 per unit of volatility. If you would invest 7,495,000 in Busan Industrial Co on October 26, 2024 and sell it today you would earn a total of 435,000 from holding Busan Industrial Co or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Busan Industrial Co
Performance |
| Timeline |
| Lotte Data Communication |
| Busan Industrial |
Lotte Data and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Busan Industrial
The main advantage of trading using opposite Lotte Data and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Busan 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind | Lotte Data vs. RPBio Inc |
| Busan Industrial vs. Lotte Data Communication | Busan Industrial vs. Seoyon Topmetal Co | Busan Industrial vs. LEENO Industrial | Busan Industrial vs. Dongil Metal 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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