Correlation Between TK Chemical and Lotte Non

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

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

Diversification Opportunities for TK Chemical and Lotte Non

0.49

Correlation Coefficient

TK Chemical  Lotte Non

Very weak diversification

The 3 months correlation between 104480 and Lotte is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical 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 TK Chemical 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 TK Chemical 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 TK Chemical i.e., TK Chemical and Lotte Non go up and down completely randomly.

Pair Corralation between TK Chemical and Lotte Non

Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Lotte Non. In addition to that, TK Chemical is 1.06 times more volatile than Lotte Non Life Insurance. It trades about -0.27 of its total potential returns per unit of risk. Lotte Non Life Insurance is currently generating about -0.15 per unit of volatility. If you would invest  207,000  in Lotte Non Life Insurance on December 24, 2024 and sell it today you would lose (26,900) from holding Lotte Non Life Insurance or give up 13.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

TK Chemical  vs.  Lotte Non Life Insurance

TK Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days TK Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lotte Non Life

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TK Chemical and Lotte Non

The main advantage of trading using opposite TK Chemical and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical 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 TK Chemical 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.