Correlation Between Lotte Data and Stic Investments
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Stic Investments 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 Stic Investments 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 Stic Investments, you can compare the effects of market volatilities on Lotte Data and Stic Investments 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 Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Stic Investments.
Diversification Opportunities for Lotte Data and Stic Investments
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and Stic is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments 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 Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Lotte Data i.e., Lotte Data and Stic Investments go up and down completely randomly.
Pair Corralation between Lotte Data and Stic Investments
Assuming the 90 days trading horizon Lotte Data is expected to generate 10.26 times less return on investment than Stic Investments. In addition to that, Lotte Data is 1.33 times more volatile than Stic Investments. It trades about 0.03 of its total potential returns per unit of risk. Stic Investments is currently generating about 0.44 per unit of volatility. If you would invest 715,000 in Stic Investments on September 14, 2024 and sell it today you would earn a total of 148,000 from holding Stic Investments or generate 20.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Stic Investments
Performance |
| Timeline |
| Lotte Data Communication |
| Stic Investments |
Lotte Data and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Stic Investments
The main advantage of trading using opposite Lotte Data and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Solution Advanced Technology | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind |
| Stic Investments vs. Cube Entertainment | Stic Investments vs. Dreamus Company | Stic Investments vs. LG Energy Solution | Stic Investments vs. Dongwon System |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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