Correlation Between Lotte Data and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Lotte Data and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Hanjoo Light.
Diversification Opportunities for Lotte Data and Hanjoo Light
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Hanjoo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Lotte Data i.e., Lotte Data and Hanjoo Light go up and down completely randomly.
Pair Corralation between Lotte Data and Hanjoo Light
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 0.88 times more return on investment than Hanjoo Light. However, Lotte Data Communication is 1.13 times less risky than Hanjoo Light. It trades about 0.0 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.1 per unit of risk. If you would invest 2,451,965 in Lotte Data Communication on August 28, 2024 and sell it today you would lose (431,965) from holding Lotte Data Communication or give up 17.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Hanjoo Light Metal
Performance |
| Timeline |
| Lotte Data Communication |
| Hanjoo Light Metal |
Lotte Data and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Hanjoo Light
The main advantage of trading using opposite Lotte Data and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Lotte Data vs. SK Holdings Co | Lotte Data vs. KT Corporation | Lotte Data vs. Samsung Heavy Industries | Lotte Data vs. JYP Entertainment |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
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.
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