Correlation Between Lotte Data and SCI Information
Can any of the company-specific risk be diversified away by investing in both Lotte Data and SCI Information 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 SCI Information 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 SCI Information Service, you can compare the effects of market volatilities on Lotte Data and SCI Information 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 SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and SCI Information.
Diversification Opportunities for Lotte Data and SCI Information
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and SCI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service 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 SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of Lotte Data i.e., Lotte Data and SCI Information go up and down completely randomly.
Pair Corralation between Lotte Data and SCI Information
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.21 times more return on investment than SCI Information. However, Lotte Data is 1.21 times more volatile than SCI Information Service. It trades about -0.01 of its potential returns per unit of risk. SCI Information Service 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. SCI Information Service
Performance |
| Timeline |
| Lotte Data Communication |
| SCI Information Service |
Lotte Data and SCI Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and SCI Information
The main advantage of trading using opposite Lotte Data and SCI Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, SCI Information 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 SCI Information will offset losses from the drop in SCI Information'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 |
| SCI Information vs. Haitai Confectionery Foods | SCI Information vs. Hanjin Transportation Co | SCI Information vs. Daesung Hi Tech Co | SCI Information vs. Iljin Display |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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