Correlation Between DAEMO Engineering and Lotte Data
Can any of the company-specific risk be diversified away by investing in both DAEMO Engineering 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 DAEMO Engineering and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAEMO Engineering Co and Lotte Data Communication, you can compare the effects of market volatilities on DAEMO Engineering 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 DAEMO Engineering with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEMO Engineering and Lotte Data.
Diversification Opportunities for DAEMO Engineering and Lotte Data
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between DAEMO and Lotte is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding DAEMO Engineering Co 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 DAEMO Engineering 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 DAEMO Engineering Co 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 DAEMO Engineering i.e., DAEMO Engineering and Lotte Data go up and down completely randomly.
Pair Corralation between DAEMO Engineering and Lotte Data
Assuming the 90 days trading horizon DAEMO Engineering Co is expected to generate 2.13 times more return on investment than Lotte Data. However, DAEMO Engineering is 2.13 times more volatile than Lotte Data Communication. It trades about 0.07 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of risk. If you would invest 965,000 in DAEMO Engineering Co on August 29, 2024 and sell it today you would earn a total of 48,000 from holding DAEMO Engineering Co or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAEMO Engineering Co vs. Lotte Data Communication
Performance |
| Timeline |
| DAEMO Engineering |
| Lotte Data Communication |
DAEMO Engineering and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAEMO Engineering and Lotte Data
The main advantage of trading using opposite DAEMO Engineering and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAEMO Engineering 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.The idea behind DAEMO Engineering Co and Lotte Data Communication pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Daou Tech | Lotte Data vs. KT Corporation | Lotte Data vs. Samsung Heavy Industries |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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