Correlation Between Lotte Chemical and Arkadia Digital
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Arkadia Digital 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 Arkadia Digital 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 Arkadia Digital Media, you can compare the effects of market volatilities on Lotte Chemical and Arkadia Digital 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 Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Arkadia Digital.
Diversification Opportunities for Lotte Chemical and Arkadia Digital
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and Arkadia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Arkadia Digital Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkadia Digital Media 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 Arkadia Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkadia Digital Media has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Arkadia Digital go up and down completely randomly.
Pair Corralation between Lotte Chemical and Arkadia Digital
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Arkadia Digital. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 2.98 times less risky than Arkadia Digital. The stock trades about -0.04 of its potential returns per unit of risk. The Arkadia Digital Media is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Arkadia Digital Media on October 23, 2024 and sell it today you would earn a total of 200.00 from holding Arkadia Digital Media or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Arkadia Digital Media
Performance |
| Timeline |
| Lotte Chemical Titan |
| Arkadia Digital Media |
Lotte Chemical and Arkadia Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Arkadia Digital
The main advantage of trading using opposite Lotte Chemical and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Arkadia Digital 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 Arkadia Digital will offset losses from the drop in Arkadia Digital'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 |
| Arkadia Digital vs. Electronic City Indonesia | Arkadia Digital vs. MD Pictures Tbk | Arkadia Digital vs. Bintang Oto Global | Arkadia Digital vs. Graha Layar Prima |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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