Correlation Between Lotte Chemical and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Petronas Chemicals 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 Petronas Chemicals 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 Petronas Chemicals Group, you can compare the effects of market volatilities on Lotte Chemical and Petronas Chemicals 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 Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Petronas Chemicals.
Diversification Opportunities for Lotte Chemical and Petronas Chemicals
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lotte and Petronas is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals 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 Petronas Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Chemicals has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Lotte Chemical and Petronas Chemicals
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Petronas Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 1.1 times less risky than Petronas Chemicals. The stock trades about -0.52 of its potential returns per unit of risk. The Petronas Chemicals Group is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 556.00 in Petronas Chemicals Group on August 28, 2024 and sell it today you would lose (76.00) from holding Petronas Chemicals Group or give up 13.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Petronas Chemicals Group
Performance |
| Timeline |
| Lotte Chemical Titan |
| Petronas Chemicals |
Lotte Chemical and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Petronas Chemicals
The main advantage of trading using opposite Lotte Chemical and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Petronas Chemicals 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 Petronas Chemicals will offset losses from the drop in Petronas Chemicals' long position.| Lotte Chemical vs. Digistar Bhd | Lotte Chemical vs. Minetech Resources Bhd | Lotte Chemical vs. OpenSys M Bhd | Lotte Chemical vs. Insas Bhd |
| Petronas Chemicals vs. Digistar Bhd | Petronas Chemicals vs. Minetech Resources Bhd | Petronas Chemicals vs. OpenSys M Bhd | Petronas Chemicals vs. Insas 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |