Correlation Between Lotte Data and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Hanshin Construction 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 Lotte Data and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Data Communication and Hanshin Construction Co, you can compare the effects of market volatilities on Lotte Data and Hanshin Construction 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 Lotte Data with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Hanshin Construction.
Diversification Opportunities for Lotte Data and Hanshin Construction
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and Hanshin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and Lotte Data 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 Lotte Data Communication are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Lotte Data i.e., Lotte Data and Hanshin Construction go up and down completely randomly.
Pair Corralation between Lotte Data and Hanshin Construction
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 1.65 times more return on investment than Hanshin Construction. However, Lotte Data is 1.65 times more volatile than Hanshin Construction Co. It trades about 0.01 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about 0.0 per unit of risk. If you would invest 2,314,380 in Lotte Data Communication on September 20, 2024 and sell it today you would lose (324,380) from holding Lotte Data Communication or give up 14.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Data Communication vs. Hanshin Construction Co
Performance |
Timeline |
Lotte Data Communication |
Hanshin Construction |
Lotte Data and Hanshin Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Data and Hanshin Construction
The main advantage of trading using opposite Lotte Data and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.Lotte Data vs. Hana Materials | Lotte Data vs. Tuksu Engineering ConstructionLtd | Lotte Data vs. Hanshin Construction Co | Lotte Data vs. Ssangyong Materials Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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