Correlation Between Lotte Chemical and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Malaysia Steel 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 Malaysia Steel 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 Malaysia Steel Works, you can compare the effects of market volatilities on Lotte Chemical and Malaysia Steel 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 Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Malaysia Steel.
Diversification Opportunities for Lotte Chemical and Malaysia Steel
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Malaysia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works 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 Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Malaysia Steel go up and down completely randomly.
Pair Corralation between Lotte Chemical and Malaysia Steel
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Malaysia Steel. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 1.04 times less risky than Malaysia Steel. The stock trades about -0.05 of its potential returns per unit of risk. The Malaysia Steel Works is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Malaysia Steel Works on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Malaysia Steel Works or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Malaysia Steel Works
Performance |
| Timeline |
| Lotte Chemical Titan |
| Malaysia Steel Works |
Lotte Chemical and Malaysia Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Malaysia Steel
The main advantage of trading using opposite Lotte Chemical and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Malaysia Steel 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's long position.| Lotte Chemical vs. Choo Bee Metal | Lotte Chemical vs. Melewar Industrial Group | Lotte Chemical vs. Daya Materials Bhd | Lotte Chemical vs. Public Packages Holdings |
| Malaysia Steel vs. PMB Technology Bhd | Malaysia Steel vs. Pantech Group Holdings | Malaysia Steel vs. CSC Steel Holdings | Malaysia Steel vs. Coraza Integrated Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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