Correlation Between Lotte Fine and Jeil Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Jeil Steel 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 Jeil Steel 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 Jeil Steel Mfg, you can compare the effects of market volatilities on Lotte Fine and Jeil Steel 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 Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Jeil Steel.
Diversification Opportunities for Lotte Fine and Jeil Steel
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and Jeil is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg 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 Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Lotte Fine i.e., Lotte Fine and Jeil Steel go up and down completely randomly.
Pair Corralation between Lotte Fine and Jeil Steel
Assuming the 90 days trading horizon Lotte Fine is expected to generate 3.77 times less return on investment than Jeil Steel. But when comparing it to its historical volatility, Lotte Fine Chemical is 1.67 times less risky than Jeil Steel. It trades about 0.03 of its potential returns per unit of risk. Jeil Steel Mfg is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 169,300 in Jeil Steel Mfg on December 30, 2024 and sell it today you would earn a total of 19,200 from holding Jeil Steel Mfg or generate 11.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Fine Chemical vs. Jeil Steel Mfg
Performance |
Timeline |
Lotte Fine Chemical |
Jeil Steel Mfg |
Lotte Fine and Jeil Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Fine and Jeil Steel
The main advantage of trading using opposite Lotte Fine and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Jeil Steel 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.Lotte Fine vs. Lotte Non Life Insurance | Lotte Fine vs. KB Financial Group | Lotte Fine vs. DB Insurance Co | Lotte Fine vs. Koryo Credit Information |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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