Correlation Between Lotte Data and InfoBank
Can any of the company-specific risk be diversified away by investing in both Lotte Data and InfoBank 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 InfoBank 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 InfoBank, you can compare the effects of market volatilities on Lotte Data and InfoBank 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 InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and InfoBank.
Diversification Opportunities for Lotte Data and InfoBank
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and InfoBank is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank 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 InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Lotte Data i.e., Lotte Data and InfoBank go up and down completely randomly.
Pair Corralation between Lotte Data and InfoBank
Assuming the 90 days trading horizon Lotte Data is expected to generate 2.57 times less return on investment than InfoBank. But when comparing it to its historical volatility, Lotte Data Communication is 2.65 times less risky than InfoBank. It trades about 0.2 of its potential returns per unit of risk. InfoBank is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 658,526 in InfoBank on October 13, 2024 and sell it today you would earn a total of 120,474 from holding InfoBank or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. InfoBank
Performance |
| Timeline |
| Lotte Data Communication |
| InfoBank |
Lotte Data and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and InfoBank
The main advantage of trading using opposite Lotte Data and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Lotte Data vs. Hansol Homedeco Co | Lotte Data vs. Daishin Information Communications | Lotte Data vs. Korea Alcohol Industrial | Lotte Data vs. Korea Information Communications |
| InfoBank vs. Korea Information Communications | InfoBank vs. KyungIn Electronics Co | InfoBank vs. ABCO Electronics Co | InfoBank vs. Samsung Electronics 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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