Correlation Between Moadata Co and Lotte Energy
Can any of the company-specific risk be diversified away by investing in both Moadata Co and Lotte Energy 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 Moadata Co and Lotte Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moadata Co and Lotte Energy Materials, you can compare the effects of market volatilities on Moadata Co and Lotte Energy 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 Moadata Co with a short position of Lotte Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moadata Co and Lotte Energy.
Diversification Opportunities for Moadata Co and Lotte Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Moadata and Lotte is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Moadata Co and Lotte Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Energy Materials and Moadata Co 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 Moadata Co are associated (or correlated) with Lotte Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Energy Materials has no effect on the direction of Moadata Co i.e., Moadata Co and Lotte Energy go up and down completely randomly.
Pair Corralation between Moadata Co and Lotte Energy
Assuming the 90 days trading horizon Moadata Co is expected to under-perform the Lotte Energy. But the stock apears to be less risky and, when comparing its historical volatility, Moadata Co is 1.07 times less risky than Lotte Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Lotte Energy Materials is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,690,000 in Lotte Energy Materials on September 22, 2024 and sell it today you would lose (215,000) from holding Lotte Energy Materials or give up 7.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moadata Co vs. Lotte Energy Materials
Performance |
| Timeline |
| Moadata Co |
| Lotte Energy Materials |
Moadata Co and Lotte Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moadata Co and Lotte Energy
The main advantage of trading using opposite Moadata Co and Lotte Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moadata Co position performs unexpectedly, Lotte Energy 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 Lotte Energy will offset losses from the drop in Lotte Energy's long position.| Moadata Co vs. KEPCO Engineering Construction | Moadata Co vs. Semyung Electric Machinery | Moadata Co vs. Tuksu Engineering ConstructionLtd | Moadata Co vs. Dongkuk Structures Construction |
| Lotte Energy vs. Moadata Co | Lotte Energy vs. Union Materials Corp | Lotte Energy vs. Lotte Data Communication | Lotte Energy vs. Nable Communications |
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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