Correlation Between Lotte Chemical and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Lotte Fine 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 Chemical and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chemical Corp and Lotte Fine Chemical, you can compare the effects of market volatilities on Lotte Chemical and Lotte Fine 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 Chemical with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Lotte Fine.
Diversification Opportunities for Lotte Chemical and Lotte Fine
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Lotte is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Lotte Chemical 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 Chemical Corp are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Lotte Fine go up and down completely randomly.
Pair Corralation between Lotte Chemical and Lotte Fine
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Lotte Fine. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Corp is 1.03 times less risky than Lotte Fine. The stock trades about -0.2 of its potential returns per unit of risk. The Lotte Fine Chemical is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 4,070,000 in Lotte Fine Chemical on November 4, 2024 and sell it today you would lose (100,000) from holding Lotte Fine Chemical or give up 2.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Chemical Corp vs. Lotte Fine Chemical
Performance |
Timeline |
Lotte Chemical Corp |
Lotte Fine Chemical |
Lotte Chemical and Lotte Fine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Chemical and Lotte Fine
The main advantage of trading using opposite Lotte Chemical and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Lotte Fine 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 Fine will offset losses from the drop in Lotte Fine's long position.Lotte Chemical vs. Samhyun Steel Co | Lotte Chemical vs. LG Household Healthcare | Lotte Chemical vs. Seoyon Topmetal Co | Lotte Chemical vs. Hanjoo Light Metal |
Lotte Fine vs. Insun Environment New | Lotte Fine vs. BooKook Steel Co | Lotte Fine vs. Hankukpackage Co | Lotte Fine vs. Lotte Non Life Insurance |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |