Correlation Between Lotte Chemical and Insas Bhd
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Insas Bhd 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 Insas Bhd 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 Insas Bhd, you can compare the effects of market volatilities on Lotte Chemical and Insas Bhd 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 Insas Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Insas Bhd.
Diversification Opportunities for Lotte Chemical and Insas Bhd
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Insas is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Insas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insas 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 Insas Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insas Bhd has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Insas Bhd go up and down completely randomly.
Pair Corralation between Lotte Chemical and Insas Bhd
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Insas Bhd. In addition to that, Lotte Chemical is 1.14 times more volatile than Insas Bhd. It trades about -0.08 of its total potential returns per unit of risk. Insas Bhd is currently generating about 0.03 per unit of volatility. If you would invest 85.00 in Insas Bhd on September 4, 2024 and sell it today you would earn a total of 8.00 from holding Insas Bhd or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Insas Bhd
Performance |
| Timeline |
| Lotte Chemical Titan |
| Insas Bhd |
Lotte Chemical and Insas Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Insas Bhd
The main advantage of trading using opposite Lotte Chemical and Insas Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Insas Bhd 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 Insas Bhd will offset losses from the drop in Insas Bhd's long position.| Lotte Chemical vs. Minetech Resources Bhd | Lotte Chemical vs. Swift Haulage Bhd | Lotte Chemical vs. Insas Bhd | Lotte Chemical vs. Bina Darulaman Bhd |
| Insas Bhd vs. Apex Healthcare Bhd | Insas Bhd vs. Press Metal Bhd | Insas Bhd vs. Lotte Chemical Titan | Insas Bhd vs. Aeon Credit Service |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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