Correlation Between Lotte Data and Wider Planet
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Wider Planet 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 Wider Planet 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 Wider Planet, you can compare the effects of market volatilities on Lotte Data and Wider Planet 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 Wider Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Wider Planet.
Diversification Opportunities for Lotte Data and Wider Planet
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Wider is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Wider Planet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wider Planet 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 Wider Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wider Planet has no effect on the direction of Lotte Data i.e., Lotte Data and Wider Planet go up and down completely randomly.
Pair Corralation between Lotte Data and Wider Planet
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Wider Planet. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.24 times less risky than Wider Planet. The stock trades about -0.08 of its potential returns per unit of risk. The Wider Planet is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,366,000 in Wider Planet on September 5, 2024 and sell it today you would earn a total of 424,000 from holding Wider Planet or generate 31.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Lotte Data Communication vs. Wider Planet
Performance |
| Timeline |
| Lotte Data Communication |
| Wider Planet |
Lotte Data and Wider Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Wider Planet
The main advantage of trading using opposite Lotte Data and Wider Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Wider Planet 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 Wider Planet will offset losses from the drop in Wider Planet's long position.| Lotte Data vs. Sejong Telecom | Lotte Data vs. Shinsegae Information Communication | Lotte Data vs. Shinil Electronics Co | Lotte Data vs. Samwha Electronics Co |
| Wider Planet vs. RF Materials Co | Wider Planet vs. Phoenix Materials Co | Wider Planet vs. Top Material Co | Wider Planet vs. Lotte Data Communication |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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