Correlation Between Lotte Chemical and Hanil Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Hanil 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 Lotte Chemical and Hanil Chemical 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 Hanil Chemical Ind, you can compare the effects of market volatilities on Lotte Chemical and Hanil 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 Lotte Chemical with a short position of Hanil Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Hanil Chemical.
Diversification Opportunities for Lotte Chemical and Hanil Chemical
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and Hanil is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Hanil Chemical Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Chemical Ind 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 Hanil Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Chemical Ind has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Hanil Chemical go up and down completely randomly.
Pair Corralation between Lotte Chemical and Hanil Chemical
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Hanil Chemical. In addition to that, Lotte Chemical is 1.89 times more volatile than Hanil Chemical Ind. It trades about -0.09 of its total potential returns per unit of risk. Hanil Chemical Ind is currently generating about -0.05 per unit of volatility. If you would invest 1,188,740 in Hanil Chemical Ind on November 2, 2024 and sell it today you would lose (132,740) from holding Hanil Chemical Ind or give up 11.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. Hanil Chemical Ind
Performance |
| Timeline |
| Lotte Chemical Corp |
| Hanil Chemical Ind |
Lotte Chemical and Hanil Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Hanil Chemical
The main advantage of trading using opposite Lotte Chemical and Hanil Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Hanil 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 Hanil Chemical will offset losses from the drop in Hanil Chemical's long position.| Lotte Chemical vs. Display Tech Co | Lotte Chemical vs. DB Insurance Co | Lotte Chemical vs. Dongil Metal Co | Lotte Chemical vs. Lotte Non Life Insurance |
| Hanil Chemical vs. Daejoo Electronic Materials | Hanil Chemical vs. Foodnamoo | Hanil Chemical vs. LAKE MATERIALS LTD | Hanil Chemical vs. National Plastic Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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