Correlation Between Lotte Chemical and YTL Hospitality
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and YTL Hospitality 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 YTL Hospitality 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 YTL Hospitality REIT, you can compare the effects of market volatilities on Lotte Chemical and YTL Hospitality 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 YTL Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and YTL Hospitality.
Diversification Opportunities for Lotte Chemical and YTL Hospitality
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and YTL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and YTL Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Hospitality REIT 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 YTL Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Hospitality REIT has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and YTL Hospitality go up and down completely randomly.
Pair Corralation between Lotte Chemical and YTL Hospitality
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the YTL Hospitality. In addition to that, Lotte Chemical is 3.48 times more volatile than YTL Hospitality REIT. It trades about -0.47 of its total potential returns per unit of risk. YTL Hospitality REIT is currently generating about 0.0 per unit of volatility. If you would invest 120.00 in YTL Hospitality REIT on August 30, 2024 and sell it today you would earn a total of 0.00 from holding YTL Hospitality REIT or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lotte Chemical Titan vs. YTL Hospitality REIT
Performance |
| Timeline |
| Lotte Chemical Titan |
| YTL Hospitality REIT |
Lotte Chemical and YTL Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and YTL Hospitality
The main advantage of trading using opposite Lotte Chemical and YTL Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, YTL Hospitality 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 YTL Hospitality will offset losses from the drop in YTL Hospitality's 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 |
| YTL Hospitality vs. Shangri La Hotels | YTL Hospitality vs. Impiana Hotels Bhd | YTL Hospitality vs. Sports Toto Berhad | YTL Hospitality vs. Choo Bee Metal |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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