Correlation Between Lotte Non and Sukgyung
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Sukgyung 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 Sukgyung 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 Sukgyung AT Co, you can compare the effects of market volatilities on Lotte Non and Sukgyung 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 Sukgyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Sukgyung.
Diversification Opportunities for Lotte Non and Sukgyung
Poor diversification
The 3 months correlation between Lotte and Sukgyung is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Sukgyung AT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sukgyung AT 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 Sukgyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sukgyung AT has no effect on the direction of Lotte Non i.e., Lotte Non and Sukgyung go up and down completely randomly.
Pair Corralation between Lotte Non and Sukgyung
Assuming the 90 days trading horizon Lotte Non Life Insurance is expected to under-perform the Sukgyung. In addition to that, Lotte Non is 1.38 times more volatile than Sukgyung AT Co. It trades about -0.14 of its total potential returns per unit of risk. Sukgyung AT Co is currently generating about -0.1 per unit of volatility. If you would invest 4,520,000 in Sukgyung AT Co on September 5, 2024 and sell it today you would lose (470,000) from holding Sukgyung AT Co or give up 10.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Non Life Insurance vs. Sukgyung AT Co
Performance |
Timeline |
Lotte Non Life |
Sukgyung AT |
Lotte Non and Sukgyung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Non and Sukgyung
The main advantage of trading using opposite Lotte Non and Sukgyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Sukgyung 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 Sukgyung will offset losses from the drop in Sukgyung's long position.Lotte Non vs. Seoam Machinery Industry | Lotte Non vs. Dongwoo Farm To | Lotte Non vs. ENERGYMACHINERY KOREA CoLtd | Lotte Non vs. Samick Musical Instruments |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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