Correlation Between Lotte Data and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Data and LG Electronics 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 Electronics 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 Electronics, you can compare the effects of market volatilities on Lotte Data and LG Electronics 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 Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and LG Electronics.
Diversification Opportunities for Lotte Data and LG Electronics
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and 066570 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Lotte Data i.e., Lotte Data and LG Electronics go up and down completely randomly.
Pair Corralation between Lotte Data and LG Electronics
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the LG Electronics. In addition to that, Lotte Data is 1.8 times more volatile than LG Electronics. It trades about -0.23 of its total potential returns per unit of risk. LG Electronics is currently generating about 0.01 per unit of volatility. If you would invest 8,950,000 in LG Electronics on September 1, 2024 and sell it today you would earn a total of 20,000 from holding LG Electronics or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. LG Electronics
Performance |
| Timeline |
| Lotte Data Communication |
| LG Electronics |
Lotte Data and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and LG Electronics
The main advantage of trading using opposite Lotte Data and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, LG Electronics 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 Electronics will offset losses from the drop in LG Electronics' long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind | Lotte Data vs. Mirae Asset Daewoo |
| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics 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.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| 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 |