Correlation Between Lotte Data and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Jeju Air 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 Jeju Air 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 Jeju Air Co, you can compare the effects of market volatilities on Lotte Data and Jeju Air 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 Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Jeju Air.
Diversification Opportunities for Lotte Data and Jeju Air
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Jeju is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air 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 Jeju Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Air has no effect on the direction of Lotte Data i.e., Lotte Data and Jeju Air go up and down completely randomly.
Pair Corralation between Lotte Data and Jeju Air
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Jeju Air. In addition to that, Lotte Data is 1.35 times more volatile than Jeju Air Co. It trades about -0.23 of its total potential returns per unit of risk. Jeju Air Co is currently generating about 0.02 per unit of volatility. If you would invest 947,000 in Jeju Air Co on August 29, 2024 and sell it today you would earn a total of 14,000 from holding Jeju Air Co or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Jeju Air Co
Performance |
| Timeline |
| Lotte Data Communication |
| Jeju Air |
Lotte Data and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Jeju Air
The main advantage of trading using opposite Lotte Data and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Jeju Air 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 Jeju Air will offset losses from the drop in Jeju Air's long position.| Lotte Data vs. EV Advanced Material | Lotte Data vs. LAKE MATERIALS LTD | Lotte Data vs. Echomarketing CoLtd | Lotte Data vs. Phoenix Materials Co |
| Jeju Air vs. Samsung Electronics Co | Jeju Air vs. Samsung Electronics Co | Jeju Air vs. KB Financial Group | Jeju Air vs. Shinhan Financial Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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