Correlation Between Lotte Chemical and Binasat Communications
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Binasat Communications 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 Binasat Communications 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 Binasat Communications Bhd, you can compare the effects of market volatilities on Lotte Chemical and Binasat Communications 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 Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Binasat Communications.
Diversification Opportunities for Lotte Chemical and Binasat Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and Binasat is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications 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 Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Binasat Communications go up and down completely randomly.
Pair Corralation between Lotte Chemical and Binasat Communications
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Binasat Communications. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 1.17 times less risky than Binasat Communications. The stock trades about -0.47 of its potential returns per unit of risk. The Binasat Communications Bhd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Binasat Communications Bhd on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Binasat Communications Bhd or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Binasat Communications Bhd
Performance |
| Timeline |
| Lotte Chemical Titan |
| Binasat Communications |
Lotte Chemical and Binasat Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Binasat Communications
The main advantage of trading using opposite Lotte Chemical and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' long position.| Lotte Chemical vs. Binasat Communications Bhd | Lotte Chemical vs. K One Technology Bhd | Lotte Chemical vs. Computer Forms Bhd | Lotte Chemical vs. TAS Offshore Bhd |
| Binasat Communications vs. Duopharma Biotech Bhd | Binasat Communications vs. ES Ceramics Technology | Binasat Communications vs. Uchi Technologies Bhd | Binasat Communications vs. Oriental Food Industries |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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