Correlation Between Koryo Credit and Lotte Non

Can any of the company-specific risk be diversified away by investing in both Koryo Credit and Lotte Non 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 Koryo Credit and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Koryo Credit Information and Lotte Non Life Insurance, you can compare the effects of market volatilities on Koryo Credit and Lotte Non 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 Koryo Credit with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koryo Credit and Lotte Non.

Diversification Opportunities for Koryo Credit and Lotte Non

-0.28

Correlation Coefficient

Koryo Credit  Lotte Non

Very good diversification

The 3 months correlation between Koryo and Lotte is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Koryo Credit Information and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Koryo Credit 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 Koryo Credit Information are associated (or correlated) with Lotte Non. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of Koryo Credit i.e., Koryo Credit and Lotte Non go up and down completely randomly.

Pair Corralation between Koryo Credit and Lotte Non

Assuming the 90 days trading horizon Koryo Credit is expected to generate 3.74 times less return on investment than Lotte Non. But when comparing it to its historical volatility, Koryo Credit Information is 2.12 times less risky than Lotte Non. It trades about 0.19 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  182,000  in Lotte Non Life Insurance on October 9, 2024 and sell it today you would earn a total of  24,000  from holding Lotte Non Life Insurance or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Koryo Credit Information  vs.  Lotte Non Life Insurance

Koryo Credit Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koryo Credit Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Koryo Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong basic indicators, Lotte Non is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Koryo Credit and Lotte Non

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

The idea behind Koryo Credit Information and Lotte Non Life Insurance 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.