Correlation Between MNC Vision and Lotte Chemical

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

By analyzing existing cross correlation between MNC Vision Networks and Lotte Chemical Titan, you can compare the effects of market volatilities on MNC Vision and Lotte Chemical 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 MNC Vision with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNC Vision and Lotte Chemical.

Diversification Opportunities for MNC Vision and Lotte Chemical

-0.33

Correlation Coefficient

MNC Vision  Lotte Chemical

Very good diversification

The 3 months correlation between MNC and Lotte is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding MNC Vision Networks and Lotte Chemical Titan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Titan and MNC Vision 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 MNC Vision Networks are associated (or correlated) with Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Titan has no effect on the direction of MNC Vision i.e., MNC Vision and Lotte Chemical go up and down completely randomly.

Pair Corralation between MNC Vision and Lotte Chemical

Assuming the 90 days trading horizon MNC Vision Networks is expected to under-perform the Lotte Chemical. But the stock apears to be less risky and, when comparing its historical volatility, MNC Vision Networks is 1.01 times less risky than Lotte Chemical. The stock trades about -0.22 of its potential returns per unit of risk. The Lotte Chemical Titan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17,800  in Lotte Chemical Titan on September 3, 2024 and sell it today you would earn a total of  1,000.00  from holding Lotte Chemical Titan or generate 5.62% return on investment over 90 days.

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

MNC Vision Networks  vs.  Lotte Chemical Titan

MNC Vision Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MNC Vision Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lotte Chemical Titan

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lotte Chemical Titan are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lotte Chemical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MNC Vision and Lotte Chemical

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

The idea behind MNC Vision Networks and Lotte Chemical Titan 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.