Correlation Between Lotte Data and Daou Data
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Daou Data 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 Data 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 Data Corp, you can compare the effects of market volatilities on Lotte Data and Daou Data 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 Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Daou Data.
Diversification Opportunities for Lotte Data and Daou Data
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Daou is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp 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 Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of Lotte Data i.e., Lotte Data and Daou Data go up and down completely randomly.
Pair Corralation between Lotte Data and Daou Data
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Daou Data. In addition to that, Lotte Data is 2.33 times more volatile than Daou Data Corp. It trades about -0.18 of its total potential returns per unit of risk. Daou Data Corp is currently generating about -0.07 per unit of volatility. If you would invest 1,121,000 in Daou Data Corp on August 29, 2024 and sell it today you would lose (21,000) from holding Daou Data Corp or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Daou Data Corp
Performance |
| Timeline |
| Lotte Data Communication |
| Daou Data Corp |
Lotte Data and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Daou Data
The main advantage of trading using opposite Lotte Data and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Daou Data 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 Data will offset losses from the drop in Daou Data's long position.| Lotte Data vs. EV Advanced Material | Lotte Data vs. LAKE MATERIALS LTD | Lotte Data vs. Echomarketing CoLtd | Lotte Data vs. Phoenix Materials Co |
| Daou Data vs. Cube Entertainment | Daou Data vs. Dreamus Company | Daou Data vs. LG Energy Solution | Daou Data 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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