Correlation Between ENF Technology and Lotte Data

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

By analyzing existing cross correlation between ENF Technology Co and Lotte Data Communication, you can compare the effects of market volatilities on ENF Technology and Lotte Data 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 ENF Technology with a short position of Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENF Technology and Lotte Data.

Diversification Opportunities for ENF Technology and Lotte Data

0.55

Correlation Coefficient

ENF Technology  Lotte Data

Very weak diversification

The 3 months correlation between ENF and Lotte is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ENF Technology Co and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication and ENF Technology 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 ENF Technology Co are associated (or correlated) with Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of ENF Technology i.e., ENF Technology and Lotte Data go up and down completely randomly.

Pair Corralation between ENF Technology and Lotte Data

Assuming the 90 days trading horizon ENF Technology Co is expected to generate 1.54 times more return on investment than Lotte Data. However, ENF Technology is 1.54 times more volatile than Lotte Data Communication. It trades about 0.33 of its potential returns per unit of risk. Lotte Data Communication is currently generating about 0.36 per unit of risk. If you would invest  1,510,423  in ENF Technology Co on October 9, 2024 and sell it today you would earn a total of  368,577  from holding ENF Technology Co or generate 24.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

ENF Technology Co  vs.  Lotte Data Communication

ENF Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENF Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENF Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lotte Data Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotte Data Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ENF Technology and Lotte Data

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

The idea behind ENF Technology Co and Lotte Data Communication 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.