Correlation Between Lotte Non and CHOROKBAEM PANY

Can any of the company-specific risk be diversified away by investing in both Lotte Non and CHOROKBAEM PANY 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 CHOROKBAEM PANY 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 CHOROKBAEM PANY Co, you can compare the effects of market volatilities on Lotte Non and CHOROKBAEM PANY 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 CHOROKBAEM PANY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and CHOROKBAEM PANY.

Diversification Opportunities for Lotte Non and CHOROKBAEM PANY

0.46

Correlation Coefficient

Lotte Non  CHOROKBAEM PANY

Very weak diversification

The 3 months correlation between Lotte and CHOROKBAEM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and CHOROKBAEM PANY Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHOROKBAEM PANY 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 CHOROKBAEM PANY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHOROKBAEM PANY has no effect on the direction of Lotte Non i.e., Lotte Non and CHOROKBAEM PANY go up and down completely randomly.

Pair Corralation between Lotte Non and CHOROKBAEM PANY

Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.27 times more return on investment than CHOROKBAEM PANY. However, Lotte Non is 1.27 times more volatile than CHOROKBAEM PANY Co. It trades about -0.06 of its potential returns per unit of risk. CHOROKBAEM PANY Co is currently generating about -0.24 per unit of risk. If you would invest  219,500  in Lotte Non Life Insurance on October 25, 2024 and sell it today you would lose (20,600) from holding Lotte Non Life Insurance or give up 9.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.41%
Values	Daily Returns

Lotte Non Life Insurance  vs.  CHOROKBAEM PANY Co

Lotte Non Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotte Non Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CHOROKBAEM PANY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHOROKBAEM PANY Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lotte Non and CHOROKBAEM PANY

The main advantage of trading using opposite Lotte Non and CHOROKBAEM PANY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, CHOROKBAEM PANY 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 CHOROKBAEM PANY will offset losses from the drop in CHOROKBAEM PANY's long position.

The idea behind Lotte Non Life Insurance and CHOROKBAEM PANY Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.