Correlation Between Lindeman Asia and Ottogi

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

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

Diversification Opportunities for Lindeman Asia and Ottogi

-0.21

Correlation Coefficient

Lindeman Asia  Ottogi

Very good diversification

The 3 months correlation between Lindeman and Ottogi is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment and Ottogi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ottogi and Lindeman Asia 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 Lindeman Asia Investment are associated (or correlated) with Ottogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ottogi has no effect on the direction of Lindeman Asia i.e., Lindeman Asia and Ottogi go up and down completely randomly.

Pair Corralation between Lindeman Asia and Ottogi

Assuming the 90 days trading horizon Lindeman Asia Investment is expected to generate 6.14 times more return on investment than Ottogi. However, Lindeman Asia is 6.14 times more volatile than Ottogi. It trades about 0.14 of its potential returns per unit of risk. Ottogi is currently generating about -0.07 per unit of risk. If you would invest  329,500  in Lindeman Asia Investment on December 1, 2024 and sell it today you would earn a total of  162,000  from holding Lindeman Asia Investment or generate 49.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Lindeman Asia Investment  vs.  Ottogi

Lindeman Asia Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lindeman Asia Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lindeman Asia sustained solid returns over the last few months and may actually be approaching a breakup point.

Ottogi

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lindeman Asia and Ottogi

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

The idea behind Lindeman Asia Investment and Ottogi 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.