Correlation Between Lotte Chemical and Daya Materials
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Daya Materials 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 Daya Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chemical Titan and Daya Materials Bhd, you can compare the effects of market volatilities on Lotte Chemical and Daya Materials 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 Daya Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Daya Materials.
Diversification Opportunities for Lotte Chemical and Daya Materials
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and Daya is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Daya Materials Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daya Materials Bhd 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 Titan are associated (or correlated) with Daya Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daya Materials Bhd has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Daya Materials go up and down completely randomly.
Pair Corralation between Lotte Chemical and Daya Materials
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Daya Materials. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 2.07 times less risky than Daya Materials. The stock trades about -0.23 of its potential returns per unit of risk. The Daya Materials Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Daya Materials Bhd on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Daya Materials Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Daya Materials Bhd
Performance |
| Timeline |
| Lotte Chemical Titan |
| Daya Materials Bhd |
Lotte Chemical and Daya Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Daya Materials
The main advantage of trading using opposite Lotte Chemical and Daya Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Daya Materials 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 Daya Materials will offset losses from the drop in Daya Materials' long position.| Lotte Chemical vs. Digistar Bhd | Lotte Chemical vs. Minetech Resources Bhd | Lotte Chemical vs. OpenSys M Bhd | Lotte Chemical vs. Insas Bhd |
| Daya Materials vs. Barakah Offshore Petroleum | Daya Materials vs. Digistar Bhd | Daya Materials vs. Minetech Resources Bhd | Daya Materials vs. OpenSys M Bhd |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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