Correlation Between Lotte Data and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Kwang Jin 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 Kwang Jin 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 Kwang Jin Ind, you can compare the effects of market volatilities on Lotte Data and Kwang Jin 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 Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Kwang Jin.
Diversification Opportunities for Lotte Data and Kwang Jin
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and Kwang is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind 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 Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of Lotte Data i.e., Lotte Data and Kwang Jin go up and down completely randomly.
Pair Corralation between Lotte Data and Kwang Jin
Assuming the 90 days trading horizon Lotte Data is expected to generate 1.18 times less return on investment than Kwang Jin. In addition to that, Lotte Data is 1.88 times more volatile than Kwang Jin Ind. It trades about 0.07 of its total potential returns per unit of risk. Kwang Jin Ind is currently generating about 0.16 per unit of volatility. If you would invest 186,200 in Kwang Jin Ind on December 10, 2024 and sell it today you would earn a total of 5,800 from holding Kwang Jin Ind or generate 3.11% 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. Kwang Jin Ind
Performance |
| Timeline |
| Lotte Data Communication |
| Kwang Jin Ind |
Lotte Data and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Kwang Jin
The main advantage of trading using opposite Lotte Data and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| Lotte Data vs. Samyoung Electronics Co | Lotte Data vs. Insung Information Co | Lotte Data vs. Sangshin Electronics Co | Lotte Data vs. Wave Electronics Co |
| Kwang Jin vs. SV Investment | Kwang Jin vs. LB Investment | Kwang Jin vs. Lotte Chilsung Beverage | Kwang Jin vs. Golden Bridge Investment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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