Correlation Between Anabatic Technologies and Lotte Chemical

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Can any of the company-specific risk be diversified away by investing in both Anabatic Technologies 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 Anabatic Technologies and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anabatic Technologies Tbk and Lotte Chemical Titan, you can compare the effects of market volatilities on Anabatic Technologies 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 Anabatic Technologies with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anabatic Technologies and Lotte Chemical.

Diversification Opportunities for Anabatic Technologies and Lotte Chemical

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Anabatic and Lotte is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Anabatic Technologies Tbk 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 Anabatic Technologies 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 Anabatic Technologies Tbk 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 Anabatic Technologies i.e., Anabatic Technologies and Lotte Chemical go up and down completely randomly.

Pair Corralation between Anabatic Technologies and Lotte Chemical

Assuming the 90 days trading horizon Anabatic Technologies is expected to generate 1.51 times less return on investment than Lotte Chemical. But when comparing it to its historical volatility, Anabatic Technologies Tbk is 1.45 times less risky than Lotte Chemical. It trades about 0.04 of its potential returns per unit of risk. Lotte Chemical Titan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16,700  in Lotte Chemical Titan on September 3, 2024 and sell it today you would earn a total of  1,800  from holding Lotte Chemical Titan or generate 10.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Anabatic Technologies Tbk  vs.  Lotte Chemical Titan

 Performance 
       Timeline  
Anabatic Technologies Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Anabatic Technologies Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Lotte Chemical Titan 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lotte Chemical Titan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Lotte Chemical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Anabatic Technologies and Lotte Chemical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Anabatic Technologies and Lotte Chemical

The main advantage of trading using opposite Anabatic Technologies and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anabatic Technologies 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.
The idea behind Anabatic Technologies Tbk and Lotte Chemical Titan pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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