Correlation Between Lotte Data and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Korea Computer 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 Computer 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 Computer, you can compare the effects of market volatilities on Lotte Data and Korea Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Korea Computer.
Diversification Opportunities for Lotte Data and Korea Computer
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Korea is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Lotte Data i.e., Lotte Data and Korea Computer go up and down completely randomly.
Pair Corralation between Lotte Data and Korea Computer
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Korea Computer. In addition to that, Lotte Data is 1.1 times more volatile than Korea Computer. It trades about 0.0 of its total potential returns per unit of risk. Korea Computer is currently generating about 0.01 per unit of volatility. If you would invest 527,180 in Korea Computer on September 4, 2024 and sell it today you would lose (39,680) from holding Korea Computer or give up 7.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Korea Computer
Performance |
| Timeline |
| Lotte Data Communication |
| Korea Computer |
Lotte Data and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Korea Computer
The main advantage of trading using opposite Lotte Data and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. ASTORY CoLtd | Lotte Data vs. Industrial Bank | Lotte Data vs. AnterogenCoLtd |
| Korea Computer vs. Aprogen Healthcare Games | Korea Computer vs. Daol Investment Securities | Korea Computer vs. Seoul Semiconductor Co | Korea Computer vs. Korea Investment Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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