Correlation Between Lotte Chemical and Press Metal
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Press Metal 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 Press Metal 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 Press Metal Bhd, you can compare the effects of market volatilities on Lotte Chemical and Press Metal 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 Press Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Press Metal.
Diversification Opportunities for Lotte Chemical and Press Metal
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Press is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Press Metal go up and down completely randomly.
Pair Corralation between Lotte Chemical and Press Metal
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Press Metal. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 1.01 times less risky than Press Metal. The stock trades about -0.52 of its potential returns per unit of risk. The Press Metal Bhd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 475.00 in Press Metal Bhd on August 28, 2024 and sell it today you would lose (9.00) from holding Press Metal Bhd or give up 1.89% 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. Press Metal Bhd
Performance |
| Timeline |
| Lotte Chemical Titan |
| Press Metal Bhd |
Lotte Chemical and Press Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Press Metal
The main advantage of trading using opposite Lotte Chemical and Press Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Press Metal 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 Press Metal will offset losses from the drop in Press Metal'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 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |