Correlation Between Lotte Data and LG Household
Can any of the company-specific risk be diversified away by investing in both Lotte Data and LG Household 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 LG Household 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 LG Household Healthcare, you can compare the effects of market volatilities on Lotte Data and LG Household 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 LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and LG Household.
Diversification Opportunities for Lotte Data and LG Household
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and 051900 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare 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 LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Lotte Data i.e., Lotte Data and LG Household go up and down completely randomly.
Pair Corralation between Lotte Data and LG Household
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the LG Household. In addition to that, Lotte Data is 1.25 times more volatile than LG Household Healthcare. It trades about -0.19 of its total potential returns per unit of risk. LG Household Healthcare is currently generating about -0.07 per unit of volatility. If you would invest 31,200,000 in LG Household Healthcare on November 5, 2024 and sell it today you would lose (500,000) from holding LG Household Healthcare or give up 1.6% 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. LG Household Healthcare
Performance |
| Timeline |
| Lotte Data Communication |
| LG Household Healthcare |
Lotte Data and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and LG Household
The main advantage of trading using opposite Lotte Data and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household'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 |
| LG Household vs. Digital Multimedia Technology | LG Household vs. Barunson Entertainment Arts | LG Household vs. LG Display Co | LG Household vs. Grand Korea Leisure |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |