Correlation Between Lotte Data and Daishin Sec

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

Diversification Opportunities for Lotte Data and Daishin Sec

0.07

Correlation Coefficient

Lotte Data  Daishin Sec

Significant diversification

The 3 months correlation between Lotte and Daishin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Daishin Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Sec 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 Daishin Sec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Sec has no effect on the direction of Lotte Data i.e., Lotte Data and Daishin Sec go up and down completely randomly.

Pair Corralation between Lotte Data and Daishin Sec

Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the Daishin Sec. In addition to that, Lotte Data is 2.77 times more volatile than Daishin Sec. It trades about -0.01 of its total potential returns per unit of risk. Daishin Sec is currently generating about 0.07 per unit of volatility. If you would invest  1,268,989  in Daishin Sec on September 12, 2024 and sell it today you would earn a total of  360,011  from holding Daishin Sec or generate 28.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.71%
Values	Daily Returns

Lotte Data Communication  vs.  Daishin Sec

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

Daishin Sec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lotte Data and Daishin Sec

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

The idea behind Lotte Data Communication and Daishin Sec 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.