Correlation Between Lotte Data and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Data and SungMoon 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 SungMoon 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 SungMoon Electronics Co, you can compare the effects of market volatilities on Lotte Data and SungMoon 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 SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and SungMoon Electronics.
Diversification Opportunities for Lotte Data and SungMoon Electronics
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and SungMoon is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon 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 SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of Lotte Data i.e., Lotte Data and SungMoon Electronics go up and down completely randomly.
Pair Corralation between Lotte Data and SungMoon Electronics
Assuming the 90 days trading horizon Lotte Data is expected to generate 1.36 times less return on investment than SungMoon Electronics. In addition to that, Lotte Data is 1.02 times more volatile than SungMoon Electronics Co. It trades about 0.07 of its total potential returns per unit of risk. SungMoon Electronics Co is currently generating about 0.1 per unit of volatility. If you would invest 111,200 in SungMoon Electronics Co on October 17, 2024 and sell it today you would earn a total of 4,300 from holding SungMoon Electronics Co or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. SungMoon Electronics Co
Performance |
| Timeline |
| Lotte Data Communication |
| SungMoon Electronics |
Lotte Data and SungMoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and SungMoon Electronics
The main advantage of trading using opposite Lotte Data and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, SungMoon 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.| Lotte Data vs. FoodNamoo | Lotte Data vs. Daejung Chemicals Metals | Lotte Data vs. Dongil Metal Co | Lotte Data vs. Hanjoo Light Metal |
| SungMoon Electronics vs. FoodNamoo | SungMoon Electronics vs. Kisan Telecom Co | SungMoon Electronics vs. Digital Power Communications | SungMoon Electronics vs. Lotte Data Communication |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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