Correlation Between Lotte Data and Dong A
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Dong A 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 Dong A 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 Dong A Eltek, you can compare the effects of market volatilities on Lotte Data and Dong A 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 Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Dong A.
Diversification Opportunities for Lotte Data and Dong A
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and Dong is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Dong A Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Eltek 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 Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Eltek has no effect on the direction of Lotte Data i.e., Lotte Data and Dong A go up and down completely randomly.
Pair Corralation between Lotte Data and Dong A
Assuming the 90 days trading horizon Lotte Data is expected to generate 9.38 times less return on investment than Dong A. But when comparing it to its historical volatility, Lotte Data Communication is 1.14 times less risky than Dong A. It trades about 0.0 of its potential returns per unit of risk. Dong A Eltek is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 437,027 in Dong A Eltek on November 28, 2024 and sell it today you would lose (96,027) from holding Dong A Eltek or give up 21.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Dong A Eltek
Performance |
| Timeline |
| Lotte Data Communication |
| Dong A Eltek |
Lotte Data and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Dong A
The main advantage of trading using opposite Lotte Data and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| Lotte Data vs. Woori Financial Group | Lotte Data vs. Jeju Bank | Lotte Data vs. Lotte Non Life Insurance | Lotte Data vs. Playgram Co |
| Dong A vs. Kyeryong Construction Industrial | Dong A vs. Samhwa Paint Industrial | Dong A vs. Lotte Data Communication | Dong A vs. Industrial Bank |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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