Correlation Between Lotte Data and Daishin Balance
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Daishin Balance 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 Daishin Balance 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 Daishin Balance No8, you can compare the effects of market volatilities on Lotte Data and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Daishin Balance.
Diversification Opportunities for Lotte Data and Daishin Balance
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Daishin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Daishin Balance No8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No8 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No8 has no effect on the direction of Lotte Data i.e., Lotte Data and Daishin Balance go up and down completely randomly.
Pair Corralation between Lotte Data and Daishin Balance
Assuming the 90 days trading horizon Lotte Data is expected to generate 17.19 times less return on investment than Daishin Balance. But when comparing it to its historical volatility, Lotte Data Communication is 2.05 times less risky than Daishin Balance. It trades about 0.03 of its potential returns per unit of risk. Daishin Balance No8 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 469,000 in Daishin Balance No8 on November 3, 2024 and sell it today you would earn a total of 84,000 from holding Daishin Balance No8 or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Daishin Balance No8
Performance |
| Timeline |
| Lotte Data Communication |
| Daishin Balance No8 |
Lotte Data and Daishin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Daishin Balance
The main advantage of trading using opposite Lotte Data and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Daishin Balance 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 Daishin Balance will offset losses from the drop in Daishin Balance's long position.| Lotte Data vs. GS Engineering Construction | Lotte Data vs. Keyang Electric Machinery | Lotte Data vs. Nable Communications | Lotte Data vs. Seohee Construction Co |
| Daishin Balance vs. Wonil Special Steel | Daishin Balance vs. EBEST Investment Securities | Daishin Balance vs. Finebesteel | Daishin Balance vs. Daehan Steel |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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