Correlation Between Lotte Fine and Hanil Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Hanil Chemical 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 Fine and Hanil Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Fine Chemical and Hanil Chemical Ind, you can compare the effects of market volatilities on Lotte Fine and Hanil Chemical 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 Fine with a short position of Hanil Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Hanil Chemical.
Diversification Opportunities for Lotte Fine and Hanil Chemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Hanil is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Hanil Chemical Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Chemical Ind and Lotte Fine 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 Fine Chemical are associated (or correlated) with Hanil Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Chemical Ind has no effect on the direction of Lotte Fine i.e., Lotte Fine and Hanil Chemical go up and down completely randomly.
Pair Corralation between Lotte Fine and Hanil Chemical
Assuming the 90 days trading horizon Lotte Fine Chemical is expected to generate 0.89 times more return on investment than Hanil Chemical. However, Lotte Fine Chemical is 1.13 times less risky than Hanil Chemical. It trades about 0.13 of its potential returns per unit of risk. Hanil Chemical Ind is currently generating about 0.08 per unit of risk. If you would invest 3,470,000 in Lotte Fine Chemical on December 4, 2024 and sell it today you would earn a total of 580,000 from holding Lotte Fine Chemical or generate 16.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Fine Chemical vs. Hanil Chemical Ind
Performance |
Timeline |
Lotte Fine Chemical |
Hanil Chemical Ind |
Lotte Fine and Hanil Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Fine and Hanil Chemical
The main advantage of trading using opposite Lotte Fine and Hanil Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Hanil Chemical 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 Hanil Chemical will offset losses from the drop in Hanil Chemical's long position.Lotte Fine vs. Dong A Steel Technology | Lotte Fine vs. FNSTech Co | Lotte Fine vs. Sangsin Energy Display | Lotte Fine vs. ADTechnology CoLtd |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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