Correlation Between Lotte Chemical and DC HEALTHCARE
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and DC HEALTHCARE 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 DC HEALTHCARE 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 DC HEALTHCARE HOLDINGS, you can compare the effects of market volatilities on Lotte Chemical and DC HEALTHCARE 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 DC HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and DC HEALTHCARE.
Diversification Opportunities for Lotte Chemical and DC HEALTHCARE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and 0283 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and DC HEALTHCARE HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC HEALTHCARE HOLDINGS 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 DC HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC HEALTHCARE HOLDINGS has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and DC HEALTHCARE go up and down completely randomly.
Pair Corralation between Lotte Chemical and DC HEALTHCARE
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the DC HEALTHCARE. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 2.22 times less risky than DC HEALTHCARE. The stock trades about -0.49 of its potential returns per unit of risk. The DC HEALTHCARE HOLDINGS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16.00 in DC HEALTHCARE HOLDINGS on September 15, 2024 and sell it today you would earn a total of 1.00 from holding DC HEALTHCARE HOLDINGS or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. DC HEALTHCARE HOLDINGS
Performance |
| Timeline |
| Lotte Chemical Titan |
| DC HEALTHCARE HOLDINGS |
Lotte Chemical and DC HEALTHCARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and DC HEALTHCARE
The main advantage of trading using opposite Lotte Chemical and DC HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, DC HEALTHCARE 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 DC HEALTHCARE will offset losses from the drop in DC HEALTHCARE's long position.| Lotte Chemical vs. Petronas Chemicals Group | Lotte Chemical vs. Ancom Berhad | Lotte Chemical vs. Techbond Group Bhd |
| DC HEALTHCARE vs. Shangri La Hotels | DC HEALTHCARE vs. Riverview Rubber Estates | DC HEALTHCARE vs. Lotte Chemical Titan | DC HEALTHCARE vs. Malayan Banking 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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