Correlation Between Lotte Chemical and Husteel
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Husteel 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 Husteel 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 Husteel, you can compare the effects of market volatilities on Lotte Chemical and Husteel 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 Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Husteel.
Diversification Opportunities for Lotte Chemical and Husteel
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and Husteel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel 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 Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Husteel go up and down completely randomly.
Pair Corralation between Lotte Chemical and Husteel
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Husteel. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Corp is 1.9 times less risky than Husteel. The stock trades about -0.34 of its potential returns per unit of risk. The Husteel is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 393,500 in Husteel on November 5, 2024 and sell it today you would earn a total of 51,000 from holding Husteel or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. Husteel
Performance |
| Timeline |
| Lotte Chemical Corp |
| Husteel |
Lotte Chemical and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Husteel
The main advantage of trading using opposite Lotte Chemical and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Husteel 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 Husteel will offset losses from the drop in Husteel's long position.| Lotte Chemical vs. LG Chemicals | Lotte Chemical vs. POSCO Holdings | Lotte Chemical vs. Hanwha Solutions | Lotte Chemical vs. Hyundai Steel |
| Husteel vs. Union Materials Corp | Husteel vs. PNC Technologies co | Husteel vs. GS Retail Co | Husteel vs. Hyundai Engineering Plastics |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |