Correlation Between Lotte Chemical and Darmi Bersaudara
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Darmi Bersaudara 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 Darmi Bersaudara 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 Darmi Bersaudara Tbk, you can compare the effects of market volatilities on Lotte Chemical and Darmi Bersaudara 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 Darmi Bersaudara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Darmi Bersaudara.
Diversification Opportunities for Lotte Chemical and Darmi Bersaudara
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lotte and Darmi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Darmi Bersaudara Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darmi Bersaudara Tbk 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 Darmi Bersaudara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darmi Bersaudara Tbk has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Darmi Bersaudara go up and down completely randomly.
Pair Corralation between Lotte Chemical and Darmi Bersaudara
If you would invest 18,400 in Lotte Chemical Titan on September 12, 2024 and sell it today you would earn a total of 1,200 from holding Lotte Chemical Titan or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Darmi Bersaudara Tbk
Performance |
| Timeline |
| Lotte Chemical Titan |
| Darmi Bersaudara Tbk |
Lotte Chemical and Darmi Bersaudara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Darmi Bersaudara
The main advantage of trading using opposite Lotte Chemical and Darmi Bersaudara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Darmi Bersaudara 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 Darmi Bersaudara will offset losses from the drop in Darmi Bersaudara's long position.| Lotte Chemical vs. Kedaung Indah Can | Lotte Chemical vs. Kabelindo Murni Tbk | Lotte Chemical vs. Champion Pacific Indonesia | Lotte Chemical vs. Bhuwanatala Indah Permai |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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