Correlation Between Lotte Data and DB Financial
Can any of the company-specific risk be diversified away by investing in both Lotte Data and DB Financial 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 DB Financial 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 DB Financial Investment, you can compare the effects of market volatilities on Lotte Data and DB Financial 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 DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and DB Financial.
Diversification Opportunities for Lotte Data and DB Financial
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and 016610 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment 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 DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of Lotte Data i.e., Lotte Data and DB Financial go up and down completely randomly.
Pair Corralation between Lotte Data and DB Financial
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the DB Financial. In addition to that, Lotte Data is 1.85 times more volatile than DB Financial Investment. It trades about -0.19 of its total potential returns per unit of risk. DB Financial Investment is currently generating about -0.14 per unit of volatility. If you would invest 529,000 in DB Financial Investment on August 29, 2024 and sell it today you would lose (23,000) from holding DB Financial Investment or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. DB Financial Investment
Performance |
| Timeline |
| Lotte Data Communication |
| DB Financial Investment |
Lotte Data and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and DB Financial
The main advantage of trading using opposite Lotte Data and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, DB Financial 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 DB Financial will offset losses from the drop in DB Financial's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Daou Tech | Lotte Data vs. KT Corporation | Lotte Data vs. Samsung Heavy Industries |
| DB Financial vs. Daehan Steel | DB Financial vs. Moonbae Steel | DB Financial vs. Formetal Co | DB Financial vs. Dongil Steel 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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