Correlation Between Lotte Data and Daol Investment
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Daol Investment 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 Daol Investment 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 Daol Investment Securities, you can compare the effects of market volatilities on Lotte Data and Daol Investment 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 Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Daol Investment.
Diversification Opportunities for Lotte Data and Daol Investment
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Daol is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu 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 Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Lotte Data i.e., Lotte Data and Daol Investment go up and down completely randomly.
Pair Corralation between Lotte Data and Daol Investment
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 2.04 times more return on investment than Daol Investment. However, Lotte Data is 2.04 times more volatile than Daol Investment Securities. It trades about -0.02 of its potential returns per unit of risk. Daol Investment Securities is currently generating about -0.09 per unit of risk. If you would invest 2,786,101 in Lotte Data Communication on September 14, 2024 and sell it today you would lose (832,101) from holding Lotte Data Communication or give up 29.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Lotte Data Communication vs. Daol Investment Securities
Performance |
| Timeline |
| Lotte Data Communication |
| Daol Investment Secu |
Lotte Data and Daol Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Daol Investment
The main advantage of trading using opposite Lotte Data and Daol Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Daol Investment 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 Daol Investment will offset losses from the drop in Daol Investment's 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 |
| Daol Investment vs. Samsung Electronics Co | Daol Investment vs. Samsung Electronics Co | Daol Investment vs. LG Energy Solution | Daol Investment vs. SK Hynix |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |