Correlation Between Lotte Data and Handok Clean
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Handok Clean 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 Handok Clean 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 Handok Clean Tech, you can compare the effects of market volatilities on Lotte Data and Handok Clean 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 Handok Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Handok Clean.
Diversification Opportunities for Lotte Data and Handok Clean
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Handok is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Handok Clean Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handok Clean Tech 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 Handok Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handok Clean Tech has no effect on the direction of Lotte Data i.e., Lotte Data and Handok Clean go up and down completely randomly.
Pair Corralation between Lotte Data and Handok Clean
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.9 times more return on investment than Handok Clean. However, Lotte Data is 1.9 times more volatile than Handok Clean Tech. It trades about 0.01 of its potential returns per unit of risk. Handok Clean Tech is currently generating about -0.02 per unit of risk. If you would invest 2,167,283 in Lotte Data Communication on September 3, 2024 and sell it today you would lose (177,283) from holding Lotte Data Communication or give up 8.18% 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. Handok Clean Tech
Performance |
| Timeline |
| Lotte Data Communication |
| Handok Clean Tech |
Lotte Data and Handok Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Handok Clean
The main advantage of trading using opposite Lotte Data and Handok Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Handok Clean 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 Handok Clean will offset losses from the drop in Handok Clean's long position.| Lotte Data vs. Seoul Food Industrial | Lotte Data vs. Hannong Chemicals | Lotte Data vs. Sung Bo Chemicals | Lotte Data vs. Samhwa Paint Industrial |
| Handok Clean vs. Busan Industrial Co | Handok Clean vs. UNISEM Co | Handok Clean vs. RPBio Inc | Handok Clean vs. Finebesteel |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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