Correlation Between Lotte Chemical and Sanichi Technology
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Sanichi Technology 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 Sanichi Technology 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 Sanichi Technology Bhd, you can compare the effects of market volatilities on Lotte Chemical and Sanichi Technology 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 Sanichi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Sanichi Technology.
Diversification Opportunities for Lotte Chemical and Sanichi Technology
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and Sanichi is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Sanichi Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanichi Technology 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 Sanichi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanichi Technology Bhd has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Sanichi Technology go up and down completely randomly.
Pair Corralation between Lotte Chemical and Sanichi Technology
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to generate 0.8 times more return on investment than Sanichi Technology. However, Lotte Chemical Titan is 1.25 times less risky than Sanichi Technology. It trades about -0.06 of its potential returns per unit of risk. Sanichi Technology Bhd is currently generating about -0.06 per unit of risk. If you would invest 60.00 in Lotte Chemical Titan on October 16, 2024 and sell it today you would lose (3.00) from holding Lotte Chemical Titan or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Sanichi Technology Bhd
Performance |
| Timeline |
| Lotte Chemical Titan |
| Sanichi Technology Bhd |
Lotte Chemical and Sanichi Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Sanichi Technology
The main advantage of trading using opposite Lotte Chemical and Sanichi Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Sanichi Technology 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 Sanichi Technology will offset losses from the drop in Sanichi Technology's long position.| Lotte Chemical vs. Petronas Chemicals Group | Lotte Chemical vs. Ancom Berhad | Lotte Chemical vs. Techbond Group Bhd |
| Sanichi Technology vs. Malayan Banking Bhd | Sanichi Technology vs. Binasat Communications Bhd | Sanichi Technology vs. Lotte Chemical Titan | Sanichi Technology vs. Hong Leong Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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