Correlation Between Organic Tea and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Organic Tea 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 Organic Tea and Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Organic Tea Cosmetics and Lotte Data Communication, you can compare the effects of market volatilities on Organic Tea 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 Organic Tea with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Organic Tea and Lotte Data.
Diversification Opportunities for Organic Tea and Lotte Data
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Organic and Lotte is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Organic Tea Cosmetics 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 Organic Tea 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 Organic Tea Cosmetics 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 Organic Tea i.e., Organic Tea and Lotte Data go up and down completely randomly.
Pair Corralation between Organic Tea and Lotte Data
Assuming the 90 days trading horizon Organic Tea Cosmetics is expected to generate 1.57 times more return on investment than Lotte Data. However, Organic Tea is 1.57 times more volatile than Lotte Data Communication. It trades about -0.11 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of risk. If you would invest 7,500 in Organic Tea Cosmetics on August 27, 2024 and sell it today you would lose (700.00) from holding Organic Tea Cosmetics or give up 9.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Organic Tea Cosmetics vs. Lotte Data Communication
Performance |
| Timeline |
| Organic Tea Cosmetics |
| Lotte Data Communication |
Organic Tea and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Organic Tea and Lotte Data
The main advantage of trading using opposite Organic Tea and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Organic Tea 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.| Organic Tea vs. Samji Electronics Co | Organic Tea vs. Innowireless Co | Organic Tea vs. Daejoo Electronic Materials | Organic Tea vs. ABCO Electronics Co |
| Lotte Data vs. Daeduck Electronics Co | Lotte Data vs. Anam Electronics Co | Lotte Data vs. Nable Communications | Lotte Data vs. Samwha Electronics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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