Correlation Between Lotte Non-Life and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and Shinhan Financial 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 Shinhan Financial 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 Shinhan Financial Group, you can compare the effects of market volatilities on Lotte Non-Life and Shinhan Financial 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 Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and Shinhan Financial.
Diversification Opportunities for Lotte Non-Life and Shinhan Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Shinhan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial 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 Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and Shinhan Financial go up and down completely randomly.
Pair Corralation between Lotte Non-Life and Shinhan Financial
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to generate 1.76 times more return on investment than Shinhan Financial. However, Lotte Non-Life is 1.76 times more volatile than Shinhan Financial Group. It trades about 0.04 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.04 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 Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Non Life Insurance vs. Shinhan Financial Group
Performance |
Timeline |
Lotte Non Life |
Shinhan Financial |
Lotte Non-Life and Shinhan Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Non-Life and Shinhan Financial
The main advantage of trading using opposite Lotte Non-Life and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, Shinhan Financial 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 Shinhan Financial will offset losses from the drop in Shinhan Financial's 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 |
Shinhan Financial vs. Samyang Foods Co | Shinhan Financial vs. Handok Clean Tech | Shinhan Financial vs. FOODWELL Co | Shinhan Financial vs. Lotte Non Life Insurance |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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