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
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solution and Lotte is 0.45. 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 generate 1.06 times more return on investment than Lotte Data. However, Solution Advanced is 1.06 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 -0.02 per unit of risk. If you would invest 147,900 in Solution Advanced Technology on November 3, 2024 and sell it today you would earn a total of 13,700 from holding Solution Advanced Technology or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| 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. Daishin Information Communications | Solution Advanced vs. Sejong Telecom | Solution Advanced vs. Hana Materials | Solution Advanced vs. Digital Power Communications |
| Lotte Data vs. Daishin Information Communications | Lotte Data vs. Nable Communications | Lotte Data vs. Korea Information Communications | Lotte Data vs. Coloray International Investment |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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