Correlation Between Lotte Data and DataSolution
Can any of the company-specific risk be diversified away by investing in both Lotte Data and DataSolution 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 DataSolution 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 DataSolution, you can compare the effects of market volatilities on Lotte Data and DataSolution 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 DataSolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and DataSolution.
Diversification Opportunities for Lotte Data and DataSolution
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and DataSolution is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution 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 DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of Lotte Data i.e., Lotte Data and DataSolution go up and down completely randomly.
Pair Corralation between Lotte Data and DataSolution
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 0.9 times more return on investment than DataSolution. However, Lotte Data Communication is 1.11 times less risky than DataSolution. It trades about -0.01 of its potential returns per unit of risk. DataSolution is currently generating about -0.02 per unit of risk. If you would invest 2,800,842 in Lotte Data Communication on November 1, 2024 and sell it today you would lose (818,842) from holding Lotte Data Communication or give up 29.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. DataSolution
Performance |
| Timeline |
| Lotte Data Communication |
| DataSolution |
Lotte Data and DataSolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and DataSolution
The main advantage of trading using opposite Lotte Data and DataSolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, DataSolution 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 DataSolution will offset losses from the drop in DataSolution's long position.| Lotte Data vs. Korea Steel Co | Lotte Data vs. Wonil Special Steel | Lotte Data vs. Korean Reinsurance Co | Lotte Data vs. SeAH Besteel Corp |
| DataSolution vs. INFINITT Healthcare Co | DataSolution vs. GS Engineering Construction | DataSolution vs. LG Household Healthcare | DataSolution vs. Kakao Games Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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