Correlation Between Cube Entertainment and Lotte Energy
Can any of the company-specific risk be diversified away by investing in both Cube Entertainment and Lotte Energy 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 Cube Entertainment and Lotte Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cube Entertainment and Lotte Energy Materials, you can compare the effects of market volatilities on Cube Entertainment and Lotte Energy 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 Cube Entertainment with a short position of Lotte Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cube Entertainment and Lotte Energy.
Diversification Opportunities for Cube Entertainment and Lotte Energy
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cube and Lotte is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cube Entertainment and Lotte Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Energy Materials and Cube Entertainment 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 Cube Entertainment are associated (or correlated) with Lotte Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Energy Materials has no effect on the direction of Cube Entertainment i.e., Cube Entertainment and Lotte Energy go up and down completely randomly.
Pair Corralation between Cube Entertainment and Lotte Energy
Assuming the 90 days trading horizon Cube Entertainment is expected to generate 0.93 times more return on investment than Lotte Energy. However, Cube Entertainment is 1.07 times less risky than Lotte Energy. It trades about 0.06 of its potential returns per unit of risk. Lotte Energy Materials is currently generating about -0.19 per unit of risk. If you would invest 1,462,000 in Cube Entertainment on September 25, 2024 and sell it today you would earn a total of 136,000 from holding Cube Entertainment or generate 9.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cube Entertainment vs. Lotte Energy Materials
Performance |
Timeline |
Cube Entertainment |
Lotte Energy Materials |
Cube Entertainment and Lotte Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cube Entertainment and Lotte Energy
The main advantage of trading using opposite Cube Entertainment and Lotte Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cube Entertainment position performs unexpectedly, Lotte Energy 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 Energy will offset losses from the drop in Lotte Energy's long position.Cube Entertainment vs. Han Kook Steel | Cube Entertainment vs. TK Chemical | Cube Entertainment vs. Hankook Steel Co | Cube Entertainment vs. Bookook Steel |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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