Correlation Between Lotte Data and NICE Information
Can any of the company-specific risk be diversified away by investing in both Lotte Data and NICE Information 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 NICE Information 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 NICE Information Service, you can compare the effects of market volatilities on Lotte Data and NICE Information 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 NICE Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and NICE Information.
Diversification Opportunities for Lotte Data and NICE Information
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and NICE is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and NICE Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Information Service 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 NICE Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Information Service has no effect on the direction of Lotte Data i.e., Lotte Data and NICE Information go up and down completely randomly.
Pair Corralation between Lotte Data and NICE Information
Assuming the 90 days trading horizon Lotte Data is expected to generate 1.08 times less return on investment than NICE Information. But when comparing it to its historical volatility, Lotte Data Communication is 1.29 times less risky than NICE Information. It trades about 0.24 of its potential returns per unit of risk. NICE Information Service is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,227,000 in NICE Information Service on November 28, 2024 and sell it today you would earn a total of 75,000 from holding NICE Information Service or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lotte Data Communication vs. NICE Information Service
Performance |
| Timeline |
| Lotte Data Communication |
| NICE Information Service |
Lotte Data and NICE Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and NICE Information
The main advantage of trading using opposite Lotte Data and NICE Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, NICE Information 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 NICE Information will offset losses from the drop in NICE Information's long position.| Lotte Data vs. Sangsin Energy Display | Lotte Data vs. Playgram Co | Lotte Data vs. Innowireless Co | Lotte Data vs. Daejung Chemicals Metals |
| NICE Information vs. Eagon Industrial Co | NICE Information vs. AeroSpace Technology of | NICE Information vs. Guyoung Technology Co | NICE Information vs. PJ Metal 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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