Correlation Between Lotte Data and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Woori Technology 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 Woori Technology 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 Woori Technology, you can compare the effects of market volatilities on Lotte Data and Woori Technology 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 Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Woori Technology.
Diversification Opportunities for Lotte Data and Woori Technology
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Woori is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori 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 Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology has no effect on the direction of Lotte Data i.e., Lotte Data and Woori Technology go up and down completely randomly.
Pair Corralation between Lotte Data and Woori Technology
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.16 times less risky than Woori Technology. The stock trades about -0.19 of its potential returns per unit of risk. The Woori Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 235,000 in Woori Technology on August 29, 2024 and sell it today you would lose (500.00) from holding Woori Technology or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Woori Technology
Performance |
| Timeline |
| Lotte Data Communication |
| Woori Technology |
Lotte Data and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Woori Technology
The main advantage of trading using opposite Lotte Data and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Woori Technology 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 Woori Technology will offset losses from the drop in Woori Technology's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Daou Tech | Lotte Data vs. KT Corporation | Lotte Data vs. Samsung Heavy Industries |
| Woori Technology vs. Korea Real Estate | Woori Technology vs. Korea Ratings Co | Woori Technology vs. IQuest Co | Woori Technology vs. Wonbang Tech 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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