Correlation Between Lotte Data and ASTORY CoLtd

Can any of the company-specific risk be diversified away by investing in both Lotte Data and ASTORY CoLtd 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 ASTORY CoLtd 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 ASTORY CoLtd, you can compare the effects of market volatilities on Lotte Data and ASTORY CoLtd 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 ASTORY CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and ASTORY CoLtd.

Diversification Opportunities for Lotte Data and ASTORY CoLtd

-0.53

Correlation Coefficient

Lotte Data  ASTORY CoLtd

Excellent diversification

The 3 months correlation between Lotte and ASTORY is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd 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 ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of Lotte Data i.e., Lotte Data and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between Lotte Data and ASTORY CoLtd

Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the ASTORY CoLtd. In addition to that, Lotte Data is 1.03 times more volatile than ASTORY CoLtd. It trades about -0.07 of its total potential returns per unit of risk. ASTORY CoLtd is currently generating about -0.01 per unit of volatility. If you would invest  842,000  in ASTORY CoLtd on October 4, 2024 and sell it today you would lose (66,000) from holding ASTORY CoLtd or give up 7.84% of portfolio value over 90 days.

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

Lotte Data Communication  vs.  ASTORY CoLtd

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

ASTORY CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lotte Data and ASTORY CoLtd

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

The idea behind Lotte Data Communication and ASTORY CoLtd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.