Correlation Between Lotte Data and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Lotte Data and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on Lotte Data and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and KakaoBank Corp.
Diversification Opportunities for Lotte Data and KakaoBank Corp
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and KakaoBank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Lotte Data i.e., Lotte Data and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Lotte Data and KakaoBank Corp
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the KakaoBank Corp. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.2 times less risky than KakaoBank Corp. The stock trades about -0.1 of its potential returns per unit of risk. The KakaoBank Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,170,000 in KakaoBank Corp on September 24, 2024 and sell it today you would earn a total of 40,000 from holding KakaoBank Corp or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. KakaoBank Corp
Performance |
| Timeline |
| Lotte Data Communication |
| KakaoBank Corp |
Lotte Data and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and KakaoBank Corp
The main advantage of trading using opposite Lotte Data and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Lotte Data vs. Lotte Chilsung Beverage | Lotte Data vs. Sejong Telecom | Lotte Data vs. SK Telecom Co | Lotte Data vs. Korea Information Communications |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |