Correlation Between Lotte Data and Sang A
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Sang 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 Sang 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 Sang A Frontec CoLtd, you can compare the effects of market volatilities on Lotte Data and Sang 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 Sang A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Sang A.
Diversification Opportunities for Lotte Data and Sang A
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Sang is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Sang A Frontec CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sang A Frontec 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 Sang A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sang A Frontec has no effect on the direction of Lotte Data i.e., Lotte Data and Sang A go up and down completely randomly.
Pair Corralation between Lotte Data and Sang A
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.23 times more return on investment than Sang A. However, Lotte Data is 1.23 times more volatile than Sang A Frontec CoLtd. It trades about 0.0 of its potential returns per unit of risk. Sang A Frontec CoLtd is currently generating about -0.03 per unit of risk. If you would invest 2,555,154 in Lotte Data Communication on October 13, 2024 and sell it today you would lose (465,154) from holding Lotte Data Communication or give up 18.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Sang A Frontec CoLtd
Performance |
| Timeline |
| Lotte Data Communication |
| Sang A Frontec |
Lotte Data and Sang A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Sang A
The main advantage of trading using opposite Lotte Data and Sang A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Sang 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 Sang A will offset losses from the drop in Sang A's long position.| Lotte Data vs. YG Entertainment | Lotte Data vs. Korea Information Communications | Lotte Data vs. SKONEC Entertainment Co | Lotte Data vs. Barunson Entertainment Arts |
| Sang A vs. MediaZen | Sang A vs. Pan Entertainment Co | Sang A vs. SAMG Entertainment Co | Sang A vs. Lotte Data Communication |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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