Correlation Between Lotte Data and Korea Electronic
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Korea Electronic 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 Korea Electronic 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 Korea Electronic Certification, you can compare the effects of market volatilities on Lotte Data and Korea Electronic 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 Korea Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Korea Electronic.
Diversification Opportunities for Lotte Data and Korea Electronic
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Korea is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Korea Electronic Certification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electronic Cer 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 Korea Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electronic Cer has no effect on the direction of Lotte Data i.e., Lotte Data and Korea Electronic go up and down completely randomly.
Pair Corralation between Lotte Data and Korea Electronic
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.31 times more return on investment than Korea Electronic. However, Lotte Data is 1.31 times more volatile than Korea Electronic Certification. It trades about 0.0 of its potential returns per unit of risk. Korea Electronic Certification is currently generating about -0.04 per unit of risk. If you would invest 2,555,154 in Lotte Data Communication on October 13, 2024 and sell it today you would lose (465,154) from holding Lotte Data Communication or give up 18.2% 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. Korea Electronic Certification
Performance |
| Timeline |
| Lotte Data Communication |
| Korea Electronic Cer |
Lotte Data and Korea Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Korea Electronic
The main advantage of trading using opposite Lotte Data and Korea Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Korea Electronic 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 Korea Electronic will offset losses from the drop in Korea Electronic's long position.| Lotte Data vs. YG Entertainment | Lotte Data vs. Korea Information Communications | Lotte Data vs. SKONEC Entertainment Co | Lotte Data vs. Barunson Entertainment Arts |
| Korea Electronic vs. Sangsin Energy Display | Korea Electronic vs. LG Display Co | Korea Electronic vs. Lotte Data Communication | Korea Electronic vs. Industrial Bank |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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