Correlation Between Lotte Data and Hyundai Green
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Hyundai Green 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 Hyundai Green 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 Hyundai Green Food, you can compare the effects of market volatilities on Lotte Data and Hyundai Green 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 Hyundai Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Hyundai Green.
Diversification Opportunities for Lotte Data and Hyundai Green
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Hyundai is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Hyundai Green Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Green Food 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 Hyundai Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Green Food has no effect on the direction of Lotte Data i.e., Lotte Data and Hyundai Green go up and down completely randomly.
Pair Corralation between Lotte Data and Hyundai Green
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.05 times more return on investment than Hyundai Green. However, Lotte Data is 1.05 times more volatile than Hyundai Green Food. It trades about 0.14 of its potential returns per unit of risk. Hyundai Green Food is currently generating about -0.13 per unit of risk. If you would invest 1,890,000 in Lotte Data Communication on October 28, 2024 and sell it today you would earn a total of 92,000 from holding Lotte Data Communication or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Hyundai Green Food
Performance |
| Timeline |
| Lotte Data Communication |
| Hyundai Green Food |
Lotte Data and Hyundai Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Hyundai Green
The main advantage of trading using opposite Lotte Data and Hyundai Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Hyundai Green 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 Hyundai Green will offset losses from the drop in Hyundai Green's long position.| Lotte Data vs. Hyundai Home Shopping | Lotte Data vs. Daejung Chemicals Metals | Lotte Data vs. Hansol Homedeco Co | Lotte Data vs. Homecast CoLtd |
| Hyundai Green vs. Hyosung Advanced Materials | Hyundai Green vs. Jin Air Co | Hyundai Green vs. Samsung Publishing Co | Hyundai Green vs. Sangsangin Investment Securities |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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