Correlation Between Solution Advanced and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and Lotte Data 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 Data Communication, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Lotte Data.
Diversification Opportunities for Solution Advanced and Lotte Data
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Lotte is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology 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 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 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 Solution Advanced i.e., Solution Advanced and Lotte Data go up and down completely randomly.
Pair Corralation between Solution Advanced and Lotte Data
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Lotte Data. In addition to that, Solution Advanced is 1.11 times more volatile than Lotte Data Communication. It trades about -0.03 of its total potential returns per unit of risk. Lotte Data Communication is currently generating about 0.01 per unit of volatility. If you would invest 2,172,057 in Lotte Data Communication on September 12, 2024 and sell it today you would lose (322,057) from holding Lotte Data Communication or give up 14.83% 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 Data Communication
Performance |
| Timeline |
| Solution Advanced |
| Lotte Data Communication |
Solution Advanced and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Lotte Data
The main advantage of trading using opposite Solution Advanced and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Lotte Data vs. SK Holdings Co | Lotte Data vs. Solution Advanced Technology | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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