Correlation Between Star Media and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Star Media and Lotte Chemical 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 Star Media and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Media Group and Lotte Chemical Titan, you can compare the effects of market volatilities on Star Media and Lotte Chemical 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 Star Media with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and Lotte Chemical.
Diversification Opportunities for Star Media and Lotte Chemical
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Star and Lotte is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and Lotte Chemical Titan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Titan and Star Media 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 Star Media Group are associated (or correlated) with Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Titan has no effect on the direction of Star Media i.e., Star Media and Lotte Chemical go up and down completely randomly.
Pair Corralation between Star Media and Lotte Chemical
Assuming the 90 days trading horizon Star Media Group is expected to generate 0.65 times more return on investment than Lotte Chemical. However, Star Media Group is 1.53 times less risky than Lotte Chemical. It trades about 0.07 of its potential returns per unit of risk. Lotte Chemical Titan is currently generating about -0.47 per unit of risk. If you would invest 40.00 in Star Media Group on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Star Media Group or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Star Media Group vs. Lotte Chemical Titan
Performance |
| Timeline |
| Star Media Group |
| Lotte Chemical Titan |
Star Media and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Media and Lotte Chemical
The main advantage of trading using opposite Star Media and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Media position performs unexpectedly, Lotte Chemical 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 Lotte Chemical will offset losses from the drop in Lotte Chemical's long position.| Star Media vs. Hong Leong Bank | Star Media vs. Cloudpoint Technology Berhad | Star Media vs. Eonmetall Group Bhd | Star Media vs. YX Precious Metals |
| 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 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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