Correlation Between Lotte Chemical and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Kumho Petro 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 Kumho Petro 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 Kumho Petro Chemical, you can compare the effects of market volatilities on Lotte Chemical and Kumho Petro 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 Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Kumho Petro.
Diversification Opportunities for Lotte Chemical and Kumho Petro
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Kumho is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical 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 Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Kumho Petro go up and down completely randomly.
Pair Corralation between Lotte Chemical and Kumho Petro
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Kumho Petro. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Corp is 1.14 times less risky than Kumho Petro. The stock trades about -0.09 of its potential returns per unit of risk. The Kumho Petro Chemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,650,000 in Kumho Petro Chemical on October 25, 2024 and sell it today you would lose (20,000) from holding Kumho Petro Chemical or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. Kumho Petro Chemical
Performance |
| Timeline |
| Lotte Chemical Corp |
| Kumho Petro Chemical |
Lotte Chemical and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Kumho Petro
The main advantage of trading using opposite Lotte Chemical and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Lotte Chemical vs. INNOX Advanced Materials | Lotte Chemical vs. Netmarble Games Corp | Lotte Chemical vs. DoubleU Games Co | Lotte Chemical vs. Lake Materials Co |
| Kumho Petro vs. Hanmi Semiconductor Co | Kumho Petro vs. PI Advanced Materials | Kumho Petro vs. Hyosung Advanced Materials | Kumho Petro vs. Asiana Airlines |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |