Correlation Between Lotte Chemical and Ashmore Asset
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Ashmore Asset 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 Lotte Chemical and Ashmore Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chemical Titan and Ashmore Asset Management, you can compare the effects of market volatilities on Lotte Chemical and Ashmore Asset 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 Lotte Chemical with a short position of Ashmore Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Ashmore Asset.
Diversification Opportunities for Lotte Chemical and Ashmore Asset
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Ashmore is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Ashmore Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Asset Management and Lotte Chemical 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 Lotte Chemical Titan are associated (or correlated) with Ashmore Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Asset Management has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Ashmore Asset go up and down completely randomly.
Pair Corralation between Lotte Chemical and Ashmore Asset
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to generate 0.49 times more return on investment than Ashmore Asset. However, Lotte Chemical Titan is 2.02 times less risky than Ashmore Asset. It trades about 0.01 of its potential returns per unit of risk. Ashmore Asset Management is currently generating about -0.03 per unit of risk. If you would invest 19,300 in Lotte Chemical Titan on August 30, 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 | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lotte Chemical Titan vs. Ashmore Asset Management
Performance |
Timeline |
Lotte Chemical Titan |
Ashmore Asset Management |
Lotte Chemical and Ashmore Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Chemical and Ashmore Asset
The main advantage of trading using opposite Lotte Chemical and Ashmore Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Ashmore Asset 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 Ashmore Asset will offset losses from the drop in Ashmore Asset's long position.Lotte Chemical vs. Champion Pacific Indonesia | Lotte Chemical vs. Argha Karya Prima | Lotte Chemical vs. Asiaplast Industries Tbk | Lotte Chemical vs. Intanwijaya Internasional Tbk |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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