Correlation Between Lotte Reit and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Lotte Reit and Samsung Electronics 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 Lotte Reit and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Reit Co and Samsung Electronics Co, you can compare the effects of market volatilities on Lotte Reit and Samsung Electronics 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 Lotte Reit with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Reit and Samsung Electronics.
Diversification Opportunities for Lotte Reit and Samsung Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Samsung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Reit Co and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Lotte Reit 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 Lotte Reit Co are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Lotte Reit i.e., Lotte Reit and Samsung Electronics go up and down completely randomly.
Pair Corralation between Lotte Reit and Samsung Electronics
Assuming the 90 days trading horizon Lotte Reit Co is expected to generate 0.95 times more return on investment than Samsung Electronics. However, Lotte Reit Co is 1.06 times less risky than Samsung Electronics. It trades about 0.34 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.12 per unit of risk. If you would invest 280,420 in Lotte Reit Co on October 9, 2024 and sell it today you would earn a total of 33,580 from holding Lotte Reit Co or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lotte Reit Co vs. Samsung Electronics Co
Performance |
| Timeline |
| Lotte Reit |
| Samsung Electronics |
Lotte Reit and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Reit and Samsung Electronics
The main advantage of trading using opposite Lotte Reit and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Reit position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Lotte Reit vs. Ssangyong Information Communication | Lotte Reit vs. Samsung Electronics Co | Lotte Reit vs. Daeduck Electronics Co | Lotte Reit vs. Digital Power Communications |
| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics vs. UNISEM 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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