Correlation Between Lotte Chemical and Fine Besteel
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Fine Besteel 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 Fine Besteel 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 Fine Besteel Co, you can compare the effects of market volatilities on Lotte Chemical and Fine Besteel 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 Fine Besteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Fine Besteel.
Diversification Opportunities for Lotte Chemical and Fine Besteel
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lotte and Fine is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Corp and Fine Besteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Besteel 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 Fine Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Besteel has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Fine Besteel go up and down completely randomly.
Pair Corralation between Lotte Chemical and Fine Besteel
Assuming the 90 days trading horizon Lotte Chemical Corp is expected to under-perform the Fine Besteel. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Corp is 1.04 times less risky than Fine Besteel. The stock trades about -0.07 of its potential returns per unit of risk. The Fine Besteel Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 213,500 in Fine Besteel Co on November 2, 2024 and sell it today you would lose (104,100) from holding Fine Besteel Co or give up 48.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Corp vs. Fine Besteel Co
Performance |
| Timeline |
| Lotte Chemical Corp |
| Fine Besteel |
Lotte Chemical and Fine Besteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Fine Besteel
The main advantage of trading using opposite Lotte Chemical and Fine Besteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Fine Besteel 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 Fine Besteel will offset losses from the drop in Fine Besteel's long position.| Lotte Chemical vs. GS Retail Co | Lotte Chemical vs. Tway Air Co | Lotte Chemical vs. Dongil Metal Co | Lotte Chemical vs. Korean Air Lines |
| Fine Besteel vs. Shinhan Financial Group | Fine Besteel vs. Aprogen Healthcare Games | Fine Besteel vs. Woori Financial Group | Fine Besteel vs. Kakao Games Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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