Correlation Between Sapura Industrial and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Sapura Industrial 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 Sapura Industrial and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapura Industrial Bhd and Lotte Chemical Titan, you can compare the effects of market volatilities on Sapura Industrial 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 Sapura Industrial with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and Lotte Chemical.
Diversification Opportunities for Sapura Industrial and Lotte Chemical
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sapura and Lotte is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd 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 Sapura Industrial 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 Sapura Industrial Bhd 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 Sapura Industrial i.e., Sapura Industrial and Lotte Chemical go up and down completely randomly.
Pair Corralation between Sapura Industrial and Lotte Chemical
Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to generate 0.51 times more return on investment than Lotte Chemical. However, Sapura Industrial Bhd is 1.95 times less risky than Lotte Chemical. It trades about 0.27 of its potential returns per unit of risk. Lotte Chemical Titan is currently generating about -0.06 per unit of risk. If you would invest 82.00 in Sapura Industrial Bhd on October 16, 2024 and sell it today you would earn a total of 8.00 from holding Sapura Industrial Bhd or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapura Industrial Bhd vs. Lotte Chemical Titan
Performance |
| Timeline |
| Sapura Industrial Bhd |
| Lotte Chemical Titan |
Sapura Industrial and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapura Industrial and Lotte Chemical
The main advantage of trading using opposite Sapura Industrial and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial 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.| Sapura Industrial vs. Petronas Chemicals Group | Sapura Industrial vs. British American Tobacco | Sapura Industrial vs. Media Prima Bhd | Sapura Industrial vs. Resintech Bhd |
| Lotte Chemical vs. Petronas Chemicals Group | Lotte Chemical vs. Ancom Berhad | Lotte Chemical vs. Techbond Group 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.
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