Correlation Between Lotte Data and Kyobo 3
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Kyobo 3 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 Kyobo 3 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 Kyobo 3 SPAC, you can compare the effects of market volatilities on Lotte Data and Kyobo 3 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 Kyobo 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Kyobo 3.
Diversification Opportunities for Lotte Data and Kyobo 3
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Kyobo is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Kyobo 3 SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyobo 3 SPAC 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 Kyobo 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyobo 3 SPAC has no effect on the direction of Lotte Data i.e., Lotte Data and Kyobo 3 go up and down completely randomly.
Pair Corralation between Lotte Data and Kyobo 3
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 0.87 times more return on investment than Kyobo 3. However, Lotte Data Communication is 1.16 times less risky than Kyobo 3. It trades about -0.07 of its potential returns per unit of risk. Kyobo 3 SPAC is currently generating about -0.06 per unit of risk. If you would invest 2,050,000 in Lotte Data Communication on September 13, 2024 and sell it today you would lose (110,000) from holding Lotte Data Communication or give up 5.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lotte Data Communication vs. Kyobo 3 SPAC
Performance |
| Timeline |
| Lotte Data Communication |
| Kyobo 3 SPAC |
Lotte Data and Kyobo 3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Kyobo 3
The main advantage of trading using opposite Lotte Data and Kyobo 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Kyobo 3 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 Kyobo 3 will offset losses from the drop in Kyobo 3'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 |
| Kyobo 3 vs. Cube Entertainment | Kyobo 3 vs. Dreamus Company | Kyobo 3 vs. LG Energy Solution | Kyobo 3 vs. Dongwon System |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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