Correlation Between Lotte Non-Life and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Ssangyong Materials 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-Life and Ssangyong Materials 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 Ssangyong Materials Corp, you can compare the effects of market volatilities on Lotte Non-Life and Ssangyong Materials 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-Life with a short position of Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Ssangyong Materials.
Diversification Opportunities for Lotte Non-Life and Ssangyong Materials
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Ssangyong is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp and Lotte Non-Life 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Ssangyong Materials
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 0.88 times more return on investment than Ssangyong Materials. However, Lotte Non Life Insurance is 1.13 times less risky than Ssangyong Materials. It trades about 0.04 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.02 per unit of risk. If you would invest 142,500 in Lotte Non Life Insurance on September 26, 2024 and sell it today you would earn a total of 64,500 from holding Lotte Non Life Insurance or generate 45.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Non Life Insurance vs. Ssangyong Materials Corp
Performance |
Timeline |
Lotte Non Life |
Ssangyong Materials Corp |
Lotte Non-Life and Ssangyong Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Non-Life and Ssangyong Materials
The main advantage of trading using opposite Lotte Non-Life and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.Lotte Non-Life vs. AptaBio Therapeutics | Lotte Non-Life vs. Wonbang Tech Co | Lotte Non-Life vs. Busan Industrial Co | Lotte Non-Life vs. Busan Ind |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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