Correlation Between Argha Karya and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Argha Karya 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 Argha Karya and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argha Karya Prima and Lotte Chemical Titan, you can compare the effects of market volatilities on Argha Karya 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 Argha Karya with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argha Karya and Lotte Chemical.
Diversification Opportunities for Argha Karya and Lotte Chemical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Argha and Lotte is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Argha Karya Prima 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 Argha Karya 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 Argha Karya Prima 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 Argha Karya i.e., Argha Karya and Lotte Chemical go up and down completely randomly.
Pair Corralation between Argha Karya and Lotte Chemical
Assuming the 90 days trading horizon Argha Karya Prima is expected to under-perform the Lotte Chemical. In addition to that, Argha Karya is 1.35 times more volatile than Lotte Chemical Titan. It trades about -0.14 of its total potential returns per unit of risk. Lotte Chemical Titan is currently generating about 0.01 per unit of volatility. If you would invest 19,000 in Lotte Chemical Titan on October 22, 2024 and sell it today you would earn a total of 0.00 from holding Lotte Chemical Titan or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argha Karya Prima vs. Lotte Chemical Titan
Performance |
| Timeline |
| Argha Karya Prima |
| Lotte Chemical Titan |
Argha Karya and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argha Karya and Lotte Chemical
The main advantage of trading using opposite Argha Karya and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argha Karya 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.| Argha Karya vs. Asiaplast Industries Tbk | Argha Karya vs. Alumindo Light Metal | Argha Karya vs. Berlina Tbk | Argha Karya vs. Anugerah Kagum Karya |
| Lotte Chemical vs. Champion Pacific Indonesia | Lotte Chemical vs. Argha Karya Prima | Lotte Chemical vs. Asiaplast Industries Tbk | Lotte Chemical vs. Intanwijaya Internasional Tbk |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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