Correlation Between Settlebank and Lotte Chilsung

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

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

Diversification Opportunities for Settlebank and Lotte Chilsung

0.56

Correlation Coefficient

Settlebank  Lotte Chilsung

Very weak diversification

The 3 months correlation between Settlebank and Lotte is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Settlebank 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 Settlebank are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Settlebank i.e., Settlebank and Lotte Chilsung go up and down completely randomly.

Pair Corralation between Settlebank and Lotte Chilsung

Assuming the 90 days trading horizon Settlebank is expected to under-perform the Lotte Chilsung. In addition to that, Settlebank is 2.14 times more volatile than Lotte Chilsung Beverage. It trades about -0.09 of its total potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.06 per unit of volatility. If you would invest  12,930,000  in Lotte Chilsung Beverage on September 30, 2024 and sell it today you would lose (1,650,000) from holding Lotte Chilsung Beverage or give up 12.76% of portfolio value over 90 days.

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

Settlebank  vs.  Lotte Chilsung Beverage

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lotte Chilsung Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotte Chilsung Beverage 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Settlebank and Lotte Chilsung

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

The idea behind Settlebank and Lotte Chilsung Beverage 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 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.