Correlation Between SK Bioscience and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both SK Bioscience and Lotte Chilsung 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 SK Bioscience and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Bioscience Co and Lotte Chilsung Beverage, you can compare the effects of market volatilities on SK Bioscience and Lotte Chilsung 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 SK Bioscience with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Bioscience and Lotte Chilsung.
Diversification Opportunities for SK Bioscience and Lotte Chilsung
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 302440 and Lotte is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SK Bioscience Co and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and SK Bioscience 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 SK Bioscience Co are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of SK Bioscience i.e., SK Bioscience and Lotte Chilsung go up and down completely randomly.
Pair Corralation between SK Bioscience and Lotte Chilsung
Assuming the 90 days trading horizon SK Bioscience Co is expected to under-perform the Lotte Chilsung. In addition to that, SK Bioscience is 1.52 times more volatile than Lotte Chilsung Beverage. It trades about -0.14 of its total potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about 0.02 per unit of volatility. If you would invest 11,830,000 in Lotte Chilsung Beverage on August 29, 2024 and sell it today you would earn a total of 70,000 from holding Lotte Chilsung Beverage or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Bioscience Co vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| SK Bioscience |
| Lotte Chilsung Beverage |
SK Bioscience and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Bioscience and Lotte Chilsung
The main advantage of trading using opposite SK Bioscience and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Bioscience position performs unexpectedly, Lotte Chilsung 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 Chilsung will offset losses from the drop in Lotte Chilsung's long position.| SK Bioscience vs. Samsung Biologics Co | SK Bioscience vs. Sk Biopharmaceuticals Co | SK Bioscience vs. ABL Bio | SK Bioscience vs. Green Cross Lab |
| Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. Hyundai Motor Co | Lotte Chilsung vs. Hyundai Motor |
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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