Correlation Between Lotte Chemical and MSC
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and MSC 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 MSC 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 MSC Co, you can compare the effects of market volatilities on Lotte Chemical and MSC 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 MSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and MSC.
Diversification Opportunities for Lotte Chemical and MSC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and MSC is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and MSC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSC Co 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 MSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSC Co has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and MSC go up and down completely randomly.
Pair Corralation between Lotte Chemical and MSC
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the MSC. In addition to that, Lotte Chemical is 1.05 times more volatile than MSC Co. It trades about -0.27 of its total potential returns per unit of risk. MSC Co is currently generating about 0.19 per unit of volatility. If you would invest 560,070 in MSC Co on October 21, 2024 and sell it today you would earn a total of 30,930 from holding MSC Co or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. MSC Co
Performance |
| Timeline |
| Lotte Chemical Corp |
| MSC Co |
Lotte Chemical and MSC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and MSC
The main advantage of trading using opposite Lotte Chemical and MSC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, MSC 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 MSC will offset losses from the drop in MSC's long position.| Lotte Chemical vs. Fine Besteel Co | Lotte Chemical vs. Hanil Chemical Ind | Lotte Chemical vs. Miwon Chemical | Lotte Chemical vs. Cloud Air CoLtd |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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