Correlation Between Lotte Non and Hotel Shilla
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Hotel Shilla 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 Non and Hotel Shilla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Non Life Insurance and Hotel Shilla Co, you can compare the effects of market volatilities on Lotte Non and Hotel Shilla 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 Non with a short position of Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Hotel Shilla.
Diversification Opportunities for Lotte Non and Hotel Shilla
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Hotel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla and Lotte Non 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 Non Life Insurance are associated (or correlated) with Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of Lotte Non i.e., Lotte Non and Hotel Shilla go up and down completely randomly.
Pair Corralation between Lotte Non and Hotel Shilla
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 2.65 times more return on investment than Hotel Shilla. However, Lotte Non is 2.65 times more volatile than Hotel Shilla Co. It trades about 0.04 of its potential returns per unit of risk. Hotel Shilla Co is currently generating about -0.11 per unit of risk. If you would invest 153,000 in Lotte Non Life Insurance on October 10, 2024 and sell it today you would earn a total of 60,000 from holding Lotte Non Life Insurance or generate 39.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Non Life Insurance vs. Hotel Shilla Co
Performance |
Timeline |
Lotte Non Life |
Hotel Shilla |
Lotte Non and Hotel Shilla Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Non and Hotel Shilla
The main advantage of trading using opposite Lotte Non and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.Lotte Non vs. DB Financial Investment | Lotte Non vs. LB Investment | Lotte Non vs. Jeju Beer Co | Lotte Non vs. TS Investment Corp |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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