Correlation Between Lotte Chemical and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Namhae 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 Namhae 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 Namhae Chemical, you can compare the effects of market volatilities on Lotte Chemical and Namhae 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Namhae Chemical.
Diversification Opportunities for Lotte Chemical and Namhae Chemical
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Namhae is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Namhae Chemical go up and down completely randomly.
Pair Corralation between Lotte Chemical and Namhae Chemical
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Namhae Chemical. In addition to that, Lotte Chemical is 2.04 times more volatile than Namhae Chemical. It trades about -0.06 of its total potential returns per unit of risk. Namhae Chemical is currently generating about -0.04 per unit of volatility. If you would invest 868,678 in Namhae Chemical on August 29, 2024 and sell it today you would lose (224,678) from holding Namhae Chemical or give up 25.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. Namhae Chemical
Performance |
| Timeline |
| Lotte Chemical Corp |
| Namhae Chemical |
Lotte Chemical and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Namhae Chemical
The main advantage of trading using opposite Lotte Chemical and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Namhae 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Lotte Chemical vs. SK Chemicals Co | Lotte Chemical vs. Sung Bo Chemicals | Lotte Chemical vs. Seoul Electronics Telecom | Lotte Chemical vs. Sempio Foods Co |
| Namhae Chemical vs. Ssangyong Information Communication | Namhae Chemical vs. Daedong Metals Co | Namhae Chemical vs. Dongil Metal Co | Namhae Chemical vs. Hanjoo Light Metal |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges |