Correlation Between Lotte Data and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Daou Technology 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 Daou Technology 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 Daou Technology, you can compare the effects of market volatilities on Lotte Data and Daou Technology 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 Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Daou Technology.
Diversification Opportunities for Lotte Data and Daou Technology
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Daou is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Lotte Data i.e., Lotte Data and Daou Technology go up and down completely randomly.
Pair Corralation between Lotte Data and Daou Technology
Assuming the 90 days trading horizon Lotte Data is expected to generate 1.09 times less return on investment than Daou Technology. In addition to that, Lotte Data is 1.69 times more volatile than Daou Technology. It trades about 0.0 of its total potential returns per unit of risk. Daou Technology is currently generating about 0.01 per unit of volatility. If you would invest 1,793,980 in Daou Technology on September 20, 2024 and sell it today you would lose (6,980) from holding Daou Technology or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Daou Technology
Performance |
| Timeline |
| Lotte Data Communication |
| Daou Technology |
Lotte Data and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Daou Technology
The main advantage of trading using opposite Lotte Data and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Lotte Data vs. BIT Computer Co | Lotte Data vs. Samyang Foods Co | Lotte Data vs. Sempio Foods Co | Lotte Data vs. Ssangyong Information Communication |
| Daou Technology vs. Samsung Electronics Co | Daou Technology vs. Samsung Electronics Co | Daou Technology vs. SK Hynix | Daou Technology vs. POSCO Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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