Correlation Between Lotte Chemical and Champion Pacific
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Champion Pacific 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 Champion Pacific 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 Champion Pacific Indonesia, you can compare the effects of market volatilities on Lotte Chemical and Champion Pacific 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 Champion Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Champion Pacific.
Diversification Opportunities for Lotte Chemical and Champion Pacific
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and Champion is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Champion Pacific Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Pacific Ind 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 Champion Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Pacific Ind has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Champion Pacific go up and down completely randomly.
Pair Corralation between Lotte Chemical and Champion Pacific
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 2.82 times less return on investment than Champion Pacific. In addition to that, Lotte Chemical is 1.75 times more volatile than Champion Pacific Indonesia. It trades about 0.0 of its total potential returns per unit of risk. Champion Pacific Indonesia is currently generating about 0.02 per unit of volatility. If you would invest 47,400 in Champion Pacific Indonesia on August 28, 2024 and sell it today you would earn a total of 3,100 from holding Champion Pacific Indonesia or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Champion Pacific Indonesia
Performance |
| Timeline |
| Lotte Chemical Titan |
| Champion Pacific Ind |
Lotte Chemical and Champion Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Champion Pacific
The main advantage of trading using opposite Lotte Chemical and Champion Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Champion Pacific 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 Champion Pacific will offset losses from the drop in Champion Pacific's long position.| Lotte Chemical vs. Kedaung Indah Can | Lotte Chemical vs. Langgeng Makmur Industri | Lotte Chemical vs. Kabelindo Murni Tbk | Lotte Chemical vs. Mustika Ratu Tbk |
| Champion Pacific vs. Intanwijaya Internasional Tbk | Champion Pacific vs. Asiaplast Industries Tbk | Champion Pacific vs. Trias Sentosa Tbk | Champion Pacific vs. Lotte Chemical Titan |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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