Correlation Between Lotte Data and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Jeong Moon 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 Jeong Moon 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 Jeong Moon Information, you can compare the effects of market volatilities on Lotte Data and Jeong Moon 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 Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Jeong Moon.
Diversification Opportunities for Lotte Data and Jeong Moon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Jeong is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information 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 Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of Lotte Data i.e., Lotte Data and Jeong Moon go up and down completely randomly.
Pair Corralation between Lotte Data and Jeong Moon
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.61 times more return on investment than Jeong Moon. However, Lotte Data is 1.61 times more volatile than Jeong Moon Information. It trades about -0.01 of its potential returns per unit of risk. Jeong Moon Information is currently generating about -0.03 per unit of risk. If you would invest 2,830,325 in Lotte Data Communication on November 5, 2024 and sell it today you would lose (876,325) from holding Lotte Data Communication or give up 30.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Jeong Moon Information
Performance |
| Timeline |
| Lotte Data Communication |
| Jeong Moon Information |
Lotte Data and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Jeong Moon
The main advantage of trading using opposite Lotte Data and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's long position.| Lotte Data vs. Yura Tech Co | Lotte Data vs. Woori Technology | Lotte Data vs. Korea Information Engineering | Lotte Data vs. FNSTech Co |
| Jeong Moon vs. INFINITT Healthcare Co | Jeong Moon vs. Homecast CoLtd | Jeong Moon vs. Aprogen Healthcare Games | Jeong Moon vs. Handok Clean Tech |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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