Correlation Between Fauji Foods and Lotte Chemical
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By analyzing existing cross correlation between Fauji Foods and Lotte Chemical Pakistan, you can compare the effects of market volatilities on Fauji Foods 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 Fauji Foods with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fauji Foods and Lotte Chemical.
Diversification Opportunities for Fauji Foods and Lotte Chemical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fauji and Lotte is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Foods and Lotte Chemical Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Pakistan and Fauji Foods 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 Fauji Foods 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 Pakistan has no effect on the direction of Fauji Foods i.e., Fauji Foods and Lotte Chemical go up and down completely randomly.
Pair Corralation between Fauji Foods and Lotte Chemical
Assuming the 90 days trading horizon Fauji Foods is expected to under-perform the Lotte Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Fauji Foods is 1.14 times less risky than Lotte Chemical. The stock trades about -0.38 of its potential returns per unit of risk. The Lotte Chemical Pakistan is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Lotte Chemical Pakistan on November 4, 2024 and sell it today you would earn a total of 26.00 from holding Lotte Chemical Pakistan or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fauji Foods vs. Lotte Chemical Pakistan
Performance |
| Timeline |
| Fauji Foods |
| Lotte Chemical Pakistan |
Fauji Foods and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fauji Foods and Lotte Chemical
The main advantage of trading using opposite Fauji Foods and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Foods 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.| Fauji Foods vs. Air Link Communication | Fauji Foods vs. Bawany Air Products | Fauji Foods vs. Ghandhara Automobile | Fauji Foods vs. Pak Datacom |
| Lotte Chemical vs. Allied Bank | Lotte Chemical vs. Unilever Pakistan Foods | Lotte Chemical vs. The Organic Meat | Lotte Chemical vs. Apna Microfinance Bank |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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