Correlation Between Lotte Data and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Sejong Telecom 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 Sejong Telecom 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 Sejong Telecom, you can compare the effects of market volatilities on Lotte Data and Sejong Telecom 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 Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Sejong Telecom.
Diversification Opportunities for Lotte Data and Sejong Telecom
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Sejong is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom 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 Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of Lotte Data i.e., Lotte Data and Sejong Telecom go up and down completely randomly.
Pair Corralation between Lotte Data and Sejong Telecom
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.81 times more return on investment than Sejong Telecom. However, Lotte Data is 1.81 times more volatile than Sejong Telecom. It trades about -0.07 of its potential returns per unit of risk. Sejong Telecom is currently generating about -0.36 per unit of risk. If you would invest 2,050,000 in Lotte Data Communication on September 13, 2024 and sell it today you would lose (110,000) from holding Lotte Data Communication or give up 5.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Sejong Telecom
Performance |
| Timeline |
| Lotte Data Communication |
| Sejong Telecom |
Lotte Data and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Sejong Telecom
The main advantage of trading using opposite Lotte Data and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Solution Advanced Technology | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind |
| Sejong Telecom vs. Sam Chun Dang | Sejong Telecom vs. SAMRYOONG CoLtd | Sejong Telecom vs. BYON Co | Sejong Telecom vs. Sangsangin 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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