Correlation Between Lotte Chemical and Korea Zinc
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Korea Zinc 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 Korea Zinc 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 Korea Zinc, you can compare the effects of market volatilities on Lotte Chemical and Korea Zinc 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 Korea Zinc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Korea Zinc.
Diversification Opportunities for Lotte Chemical and Korea Zinc
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and Korea is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Korea Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Zinc 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 Korea Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Zinc has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Korea Zinc go up and down completely randomly.
Pair Corralation between Lotte Chemical and Korea Zinc
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Korea Zinc. In addition to that, Lotte Chemical is 2.16 times more volatile than Korea Zinc. It trades about -0.34 of its total potential returns per unit of risk. Korea Zinc is currently generating about 0.01 per unit of volatility. If you would invest 99,800,000 in Korea Zinc on September 1, 2024 and sell it today you would earn a total of 200,000 from holding Korea Zinc or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. Korea Zinc
Performance |
| Timeline |
| Lotte Chemical Corp |
| Korea Zinc |
Lotte Chemical and Korea Zinc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Korea Zinc
The main advantage of trading using opposite Lotte Chemical and Korea Zinc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Korea Zinc 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 Korea Zinc will offset losses from the drop in Korea Zinc's long position.| Lotte Chemical vs. LG Chemicals | Lotte Chemical vs. POSCO Holdings | Lotte Chemical vs. Hanwha Solutions | Lotte Chemical vs. Hyundai Steel |
| Korea Zinc vs. SK Chemicals Co | Korea Zinc vs. PJ Electronics Co | Korea Zinc vs. Hannong Chemicals | Korea Zinc vs. Daeduck Electronics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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