Correlation Between FoodNamoo and Lotte Data
Can any of the company-specific risk be diversified away by investing in both FoodNamoo and Lotte Data 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 FoodNamoo and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FoodNamoo and Lotte Data Communication, you can compare the effects of market volatilities on FoodNamoo and Lotte Data 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 FoodNamoo with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of FoodNamoo and Lotte Data.
Diversification Opportunities for FoodNamoo and Lotte Data
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FoodNamoo and Lotte is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and FoodNamoo 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 FoodNamoo are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of FoodNamoo i.e., FoodNamoo and Lotte Data go up and down completely randomly.
Pair Corralation between FoodNamoo and Lotte Data
Assuming the 90 days trading horizon FoodNamoo is expected to under-perform the Lotte Data. But the stock apears to be less risky and, when comparing its historical volatility, FoodNamoo is 1.32 times less risky than Lotte Data. The stock trades about -0.39 of its potential returns per unit of risk. The Lotte Data Communication is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,937,000 in Lotte Data Communication on October 30, 2024 and sell it today you would earn a total of 45,000 from holding Lotte Data Communication or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FoodNamoo vs. Lotte Data Communication
Performance |
| Timeline |
| FoodNamoo |
| Lotte Data Communication |
FoodNamoo and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FoodNamoo and Lotte Data
The main advantage of trading using opposite FoodNamoo and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FoodNamoo position performs unexpectedly, Lotte Data 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 Data will offset losses from the drop in Lotte Data's long position.| FoodNamoo vs. Alton Sports CoLtd | FoodNamoo vs. Shinil Industrial Co | FoodNamoo vs. Industrial Bank | FoodNamoo vs. Formetal Co |
| Lotte Data vs. Daiyang Metal Co | Lotte Data vs. CKH Food Health | Lotte Data vs. Seoyon Topmetal Co | Lotte Data vs. Korea Industrial Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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