Correlation Between Lotte Data and SBI Investment
Can any of the company-specific risk be diversified away by investing in both Lotte Data and SBI Investment 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 SBI Investment 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 SBI Investment KOREA, you can compare the effects of market volatilities on Lotte Data and SBI Investment 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 SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and SBI Investment.
Diversification Opportunities for Lotte Data and SBI Investment
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and SBI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA 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 SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Lotte Data i.e., Lotte Data and SBI Investment go up and down completely randomly.
Pair Corralation between Lotte Data and SBI Investment
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the SBI Investment. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.16 times less risky than SBI Investment. The stock trades about -0.19 of its potential returns per unit of risk. The SBI Investment KOREA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 65,800 in SBI Investment KOREA on August 29, 2024 and sell it today you would earn a total of 6,600 from holding SBI Investment KOREA or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. SBI Investment KOREA
Performance |
| Timeline |
| Lotte Data Communication |
| SBI Investment KOREA |
Lotte Data and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and SBI Investment
The main advantage of trading using opposite Lotte Data and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment'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 |
| SBI Investment vs. Daekyung Machinery Engineering | SBI Investment vs. PlayD Co | SBI Investment vs. Playgram Co | SBI Investment vs. Camus Engineering Construction |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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