Correlation Between Lotte Data and Asiana Airlines
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Asiana Airlines 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 Asiana Airlines 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 Asiana Airlines, you can compare the effects of market volatilities on Lotte Data and Asiana Airlines 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 Asiana Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Asiana Airlines.
Diversification Opportunities for Lotte Data and Asiana Airlines
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Asiana is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Asiana Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiana Airlines 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 Asiana Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiana Airlines has no effect on the direction of Lotte Data i.e., Lotte Data and Asiana Airlines go up and down completely randomly.
Pair Corralation between Lotte Data and Asiana Airlines
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.61 times more return on investment than Asiana Airlines. However, Lotte Data is 1.61 times more volatile than Asiana Airlines. It trades about 0.2 of its potential returns per unit of risk. Asiana Airlines is currently generating about 0.11 per unit of risk. If you would invest 1,947,000 in Lotte Data Communication on October 13, 2024 and sell it today you would earn a total of 143,000 from holding Lotte Data Communication or generate 7.34% 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. Asiana Airlines
Performance |
| Timeline |
| Lotte Data Communication |
| Asiana Airlines |
Lotte Data and Asiana Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Asiana Airlines
The main advantage of trading using opposite Lotte Data and Asiana Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Asiana Airlines 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 Asiana Airlines will offset losses from the drop in Asiana Airlines' long position.| Lotte Data vs. Hansol Homedeco Co | Lotte Data vs. Daishin Information Communications | Lotte Data vs. Korea Alcohol Industrial | Lotte Data vs. Korea Information Communications |
| Asiana Airlines vs. Sangsin Energy Display | Asiana Airlines vs. Digital Power Communications | Asiana Airlines vs. Lotte Data Communication | Asiana Airlines vs. Display Tech 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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