Correlation Between Lotte Chemical and SGC Energy
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and SGC 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 Lotte Chemical and SGC Energy 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 SGC Energy Co, you can compare the effects of market volatilities on Lotte Chemical and SGC 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 Lotte Chemical with a short position of SGC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and SGC Energy.
Diversification Opportunities for Lotte Chemical and SGC Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and SGC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and SGC Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGC Energy 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 SGC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGC Energy has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and SGC Energy go up and down completely randomly.
Pair Corralation between Lotte Chemical and SGC Energy
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the SGC Energy. In addition to that, Lotte Chemical is 1.61 times more volatile than SGC Energy Co. It trades about -0.08 of its total potential returns per unit of risk. SGC Energy Co is currently generating about 0.01 per unit of volatility. If you would invest 2,551,619 in SGC Energy Co on August 31, 2024 and sell it today you would earn a total of 68,381 from holding SGC Energy Co or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.45% |
| Values | Daily Returns |
Lotte Chemical Corp vs. SGC Energy Co
Performance |
| Timeline |
| Lotte Chemical Corp |
| SGC Energy |
Lotte Chemical and SGC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and SGC Energy
The main advantage of trading using opposite Lotte Chemical and SGC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, SGC 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 SGC Energy will offset losses from the drop in SGC Energy's long position.| Lotte Chemical vs. SBI Investment KOREA | Lotte Chemical vs. Korea Investment Holdings | Lotte Chemical vs. InfoBank | Lotte Chemical vs. Coloray International Investment |
| SGC Energy vs. Eagle Veterinary Technology | SGC Energy vs. RFTech Co | SGC Energy vs. Dongnam Chemical Co | SGC Energy vs. Chin Yang Chemical |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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