Correlation Between Lotte Data and KT Submarine
Can any of the company-specific risk be diversified away by investing in both Lotte Data and KT Submarine 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 KT Submarine 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 KT Submarine Telecom, you can compare the effects of market volatilities on Lotte Data and KT Submarine 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 KT Submarine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and KT Submarine.
Diversification Opportunities for Lotte Data and KT Submarine
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and 060370 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and KT Submarine Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Submarine Telecom 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 KT Submarine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Submarine Telecom has no effect on the direction of Lotte Data i.e., Lotte Data and KT Submarine go up and down completely randomly.
Pair Corralation between Lotte Data and KT Submarine
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the KT Submarine. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 2.03 times less risky than KT Submarine. The stock trades about -0.2 of its potential returns per unit of risk. The KT Submarine Telecom is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,460,000 in KT Submarine Telecom on September 2, 2024 and sell it today you would lose (110,000) from holding KT Submarine Telecom 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. KT Submarine Telecom
Performance |
| Timeline |
| Lotte Data Communication |
| KT Submarine Telecom |
Lotte Data and KT Submarine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and KT Submarine
The main advantage of trading using opposite Lotte Data and KT Submarine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, KT Submarine 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 KT Submarine will offset losses from the drop in KT Submarine's long position.| Lotte Data vs. Digital Power Communications | Lotte Data vs. Wireless Power Amplifier | Lotte Data vs. Daejung Chemicals Metals | Lotte Data vs. Heungkuk Metaltech CoLtd |
| KT Submarine vs. AptaBio Therapeutics | KT Submarine vs. Daewoo SBI SPAC | KT Submarine vs. Dream Security co | KT Submarine vs. Microfriend |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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