Correlation Between Lotte Data and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on Lotte Data and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Namhwa Industrial.
Diversification Opportunities for Lotte Data and Namhwa Industrial
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Namhwa is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Lotte Data i.e., Lotte Data and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Lotte Data and Namhwa Industrial
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Namhwa Industrial. In addition to that, Lotte Data is 1.36 times more volatile than Namhwa Industrial Co. It trades about -0.07 of its total potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.0 per unit of volatility. If you would invest 540,000 in Namhwa Industrial Co on September 13, 2024 and sell it today you would lose (4,000) from holding Namhwa Industrial Co or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Namhwa Industrial Co
Performance |
| Timeline |
| Lotte Data Communication |
| Namhwa Industrial |
Lotte Data and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Namhwa Industrial
The main advantage of trading using opposite Lotte Data and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Solution Advanced Technology | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind |
| Namhwa Industrial vs. Hanjoo Light Metal | Namhwa Industrial vs. MetaLabs Co | Namhwa Industrial vs. Polaris Office Corp | Namhwa Industrial vs. SK Chemicals Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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