Correlation Between Solution Advanced and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Lotte Chilsung.
Diversification Opportunities for Solution Advanced and Lotte Chilsung
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Lotte is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology 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 Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Solution Advanced and Lotte Chilsung
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Lotte Chilsung. In addition to that, Solution Advanced is 2.13 times more volatile than Lotte Chilsung Beverage. It trades about -0.02 of its total potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.04 per unit of volatility. If you would invest 17,481,600 in Lotte Chilsung Beverage on September 13, 2024 and sell it today you would lose (5,501,600) from holding Lotte Chilsung Beverage or give up 31.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Solution Advanced |
| Lotte Chilsung Beverage |
Solution Advanced and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Lotte Chilsung
The main advantage of trading using opposite Solution Advanced and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Lotte Chilsung vs. Korea New Network | Lotte Chilsung vs. ICD Co | Lotte Chilsung vs. DYPNF CoLtd | Lotte Chilsung vs. Solution Advanced Technology |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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