Correlation Between Lotte Data and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Lotte Data and KMH Hitech 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 KMH Hitech 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 KMH Hitech Co, you can compare the effects of market volatilities on Lotte Data and KMH Hitech 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 KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and KMH Hitech.
Diversification Opportunities for Lotte Data and KMH Hitech
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and KMH is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech 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 KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of Lotte Data i.e., Lotte Data and KMH Hitech go up and down completely randomly.
Pair Corralation between Lotte Data and KMH Hitech
Assuming the 90 days trading horizon Lotte Data is expected to generate 8.67 times less return on investment than KMH Hitech. In addition to that, Lotte Data is 1.2 times more volatile than KMH Hitech Co. It trades about 0.03 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about 0.3 per unit of volatility. If you would invest 89,800 in KMH Hitech Co on November 3, 2024 and sell it today you would earn a total of 8,200 from holding KMH Hitech Co or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. KMH Hitech Co
Performance |
| Timeline |
| Lotte Data Communication |
| KMH Hitech |
Lotte Data and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and KMH Hitech
The main advantage of trading using opposite Lotte Data and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's long position.| Lotte Data vs. GS Engineering Construction | Lotte Data vs. Keyang Electric Machinery | Lotte Data vs. Nable Communications | Lotte Data vs. Seohee Construction Co |
| KMH Hitech vs. Samsung Electronics Co | KMH Hitech vs. Samsung Electronics Co | KMH Hitech vs. Hyundai Motor Co | KMH Hitech vs. Hyundai Motor |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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