Correlation Between Lotte Data and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Hwangkum Steel 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 Hwangkum Steel 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 Hwangkum Steel Technology, you can compare the effects of market volatilities on Lotte Data and Hwangkum Steel 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 Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Hwangkum Steel.
Diversification Opportunities for Lotte Data and Hwangkum Steel
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Hwangkum is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology 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 Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Lotte Data i.e., Lotte Data and Hwangkum Steel go up and down completely randomly.
Pair Corralation between Lotte Data and Hwangkum Steel
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Hwangkum Steel. In addition to that, Lotte Data is 2.07 times more volatile than Hwangkum Steel Technology. It trades about -0.09 of its total potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.13 per unit of volatility. If you would invest 682,000 in Hwangkum Steel Technology on September 3, 2024 and sell it today you would lose (166,000) from holding Hwangkum Steel Technology or give up 24.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Hwangkum Steel Technology
Performance |
| Timeline |
| Lotte Data Communication |
| Hwangkum Steel Technology |
Lotte Data and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Hwangkum Steel
The main advantage of trading using opposite Lotte Data and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Hwangkum Steel 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| Lotte Data vs. Seoul Food Industrial | Lotte Data vs. Hannong Chemicals | Lotte Data vs. Sung Bo Chemicals | Lotte Data vs. Samhwa Paint Industrial |
| Hwangkum Steel vs. DB Insurance Co | Hwangkum Steel vs. Jeju Beer Co | Hwangkum Steel vs. Korean Reinsurance Co | Hwangkum Steel vs. Dongbu Insurance 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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