Correlation Between KakaoBank Corp and Lotte Data
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp 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 KakaoBank Corp and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Lotte Data Communication, you can compare the effects of market volatilities on KakaoBank Corp 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 KakaoBank Corp with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Lotte Data.
Diversification Opportunities for KakaoBank Corp and Lotte Data
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Lotte is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp i.e., KakaoBank Corp and Lotte Data go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Lotte Data
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 1.2 times more return on investment than Lotte Data. However, KakaoBank Corp is 1.2 times more volatile than Lotte Data Communication. It trades about 0.04 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.1 per unit of risk. If you would invest 2,170,000 in KakaoBank Corp on September 24, 2024 and sell it today you would earn a total of 40,000 from holding KakaoBank Corp or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Lotte Data Communication
Performance |
| Timeline |
| KakaoBank Corp |
| Lotte Data Communication |
KakaoBank Corp and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Lotte Data
The main advantage of trading using opposite KakaoBank Corp and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp 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.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| Lotte Data vs. Lotte Chilsung Beverage | Lotte Data vs. Sejong Telecom | Lotte Data vs. SK Telecom Co | Lotte Data vs. Korea Information 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |