Correlation Between Lotte Chemical and Kedawung Setia
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Kedawung Setia 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 Kedawung Setia 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 Kedawung Setia Industrial, you can compare the effects of market volatilities on Lotte Chemical and Kedawung Setia 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 Kedawung Setia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Kedawung Setia.
Diversification Opportunities for Lotte Chemical and Kedawung Setia
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Kedawung is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Kedawung Setia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedawung Setia Industrial 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 Kedawung Setia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedawung Setia Industrial has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Kedawung Setia go up and down completely randomly.
Pair Corralation between Lotte Chemical and Kedawung Setia
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 792.82 times less return on investment than Kedawung Setia. But when comparing it to its historical volatility, Lotte Chemical Titan is 24.8 times less risky than Kedawung Setia. It trades about 0.0 of its potential returns per unit of risk. Kedawung Setia Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 19,212 in Kedawung Setia Industrial on September 4, 2024 and sell it today you would earn a total of 24,188 from holding Kedawung Setia Industrial or generate 125.9% 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. Kedawung Setia Industrial
Performance |
| Timeline |
| Lotte Chemical Titan |
| Kedawung Setia Industrial |
Lotte Chemical and Kedawung Setia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Kedawung Setia
The main advantage of trading using opposite Lotte Chemical and Kedawung Setia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Kedawung Setia 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 Kedawung Setia will offset losses from the drop in Kedawung Setia's long position.| Lotte Chemical vs. Timah Persero Tbk | Lotte Chemical vs. Semen Indonesia Persero | Lotte Chemical vs. Mitra Pinasthika Mustika | Lotte Chemical vs. Jakarta Int Hotels |
| Kedawung Setia vs. Timah Persero Tbk | Kedawung Setia vs. Semen Indonesia Persero | Kedawung Setia vs. Mitra Pinasthika Mustika | Kedawung Setia vs. Jakarta Int Hotels |
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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