Correlation Between Lotte Data and Chin Yang
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Chin Yang 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 Chin Yang 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 Chin Yang Chemical, you can compare the effects of market volatilities on Lotte Data and Chin Yang 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 Chin Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Chin Yang.
Diversification Opportunities for Lotte Data and Chin Yang
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and Chin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Chin Yang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Yang Chemical 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 Chin Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Yang Chemical has no effect on the direction of Lotte Data i.e., Lotte Data and Chin Yang go up and down completely randomly.
Pair Corralation between Lotte Data and Chin Yang
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Chin Yang. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.23 times less risky than Chin Yang. The stock trades about -0.14 of its potential returns per unit of risk. The Chin Yang Chemical is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 257,463 in Chin Yang Chemical on September 5, 2024 and sell it today you would lose (30,463) from holding Chin Yang Chemical or give up 11.83% 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. Chin Yang Chemical
Performance |
| Timeline |
| Lotte Data Communication |
| Chin Yang Chemical |
Lotte Data and Chin Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Chin Yang
The main advantage of trading using opposite Lotte Data and Chin Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Chin Yang 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 Chin Yang will offset losses from the drop in Chin Yang's long position.| Lotte Data vs. Sejong Telecom | Lotte Data vs. Shinsegae Information Communication | Lotte Data vs. Shinil Electronics Co | Lotte Data vs. Samwha Electronics Co |
| Chin Yang vs. Lotte Data Communication | Chin Yang vs. TJ media Co | Chin Yang vs. ChipsMedia | Chin Yang vs. Korea Computer |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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