Correlation Between Lotte Chemical and Shangri La
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Shangri La 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 Shangri La 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 Shangri La Hotels, you can compare the effects of market volatilities on Lotte Chemical and Shangri La 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 Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Shangri La.
Diversification Opportunities for Lotte Chemical and Shangri La
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Shangri is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels 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 Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Shangri La go up and down completely randomly.
Pair Corralation between Lotte Chemical and Shangri La
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Shangri La. In addition to that, Lotte Chemical is 2.82 times more volatile than Shangri La Hotels. It trades about -0.47 of its total potential returns per unit of risk. Shangri La Hotels is currently generating about -0.08 per unit of volatility. If you would invest 203.00 in Shangri La Hotels on August 26, 2024 and sell it today you would lose (3.00) from holding Shangri La Hotels or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Shangri La Hotels
Performance |
| Timeline |
| Lotte Chemical Titan |
| Shangri La Hotels |
Lotte Chemical and Shangri La Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Shangri La
The main advantage of trading using opposite Lotte Chemical and Shangri La positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Shangri La 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 Shangri La will offset losses from the drop in Shangri La's long position.| Lotte Chemical vs. Digistar Bhd | Lotte Chemical vs. Minetech Resources Bhd | Lotte Chemical vs. OpenSys M Bhd | Lotte Chemical vs. Insas Bhd |
| Shangri La vs. ECM Libra Financial | Shangri La vs. Lysaght Galvanized Steel | Shangri La vs. HeiTech Padu 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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