Correlation Between Lotte Chemical and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Kedaung Indah 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 Kedaung Indah 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 Kedaung Indah Can, you can compare the effects of market volatilities on Lotte Chemical and Kedaung Indah 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 Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Kedaung Indah.
Diversification Opportunities for Lotte Chemical and Kedaung Indah
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lotte and Kedaung is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Kedaung Indah Can in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedaung Indah Can 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 Kedaung Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedaung Indah Can has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Kedaung Indah go up and down completely randomly.
Pair Corralation between Lotte Chemical and Kedaung Indah
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to generate 0.65 times more return on investment than Kedaung Indah. However, Lotte Chemical Titan is 1.54 times less risky than Kedaung Indah. It trades about -0.11 of its potential returns per unit of risk. Kedaung Indah Can is currently generating about -0.21 per unit of risk. If you would invest 19,000 in Lotte Chemical Titan on November 18, 2024 and sell it today you would lose (600.00) from holding Lotte Chemical Titan or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Kedaung Indah Can
Performance |
| Timeline |
| Lotte Chemical Titan |
| Kedaung Indah Can |
Lotte Chemical and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Kedaung Indah
The main advantage of trading using opposite Lotte Chemical and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Kedaung Indah 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 Kedaung Indah will offset losses from the drop in Kedaung Indah'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 |
| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni Tbk |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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