Correlation Between Lotte Data and Seah Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Seah Steel 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 Seah Steel 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 Seah Steel Corp, you can compare the effects of market volatilities on Lotte Data and Seah Steel 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 Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Seah Steel.
Diversification Opportunities for Lotte Data and Seah Steel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Seah is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp 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 Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Lotte Data i.e., Lotte Data and Seah Steel go up and down completely randomly.
Pair Corralation between Lotte Data and Seah Steel
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Seah Steel. In addition to that, Lotte Data is 1.29 times more volatile than Seah Steel Corp. It trades about -0.21 of its total potential returns per unit of risk. Seah Steel Corp is currently generating about 0.06 per unit of volatility. If you would invest 11,400,000 in Seah Steel Corp on September 3, 2024 and sell it today you would earn a total of 260,000 from holding Seah Steel Corp or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Seah Steel Corp
Performance |
| Timeline |
| Lotte Data Communication |
| Seah Steel Corp |
Lotte Data and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Seah Steel
The main advantage of trading using opposite Lotte Data and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel'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 |
| Seah Steel vs. Ni Steel | Seah Steel vs. Korea Steel Co | Seah Steel vs. Bookook Steel | Seah Steel 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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