Correlation Between Lotte Chemical and Multi Spunindo
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Multi Spunindo 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 Multi Spunindo 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 Multi Spunindo Jaya, you can compare the effects of market volatilities on Lotte Chemical and Multi Spunindo 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 Multi Spunindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Multi Spunindo.
Diversification Opportunities for Lotte Chemical and Multi Spunindo
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Multi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Multi Spunindo Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Spunindo Jaya 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 Multi Spunindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Spunindo Jaya has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Multi Spunindo go up and down completely randomly.
Pair Corralation between Lotte Chemical and Multi Spunindo
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 3.8 times less return on investment than Multi Spunindo. But when comparing it to its historical volatility, Lotte Chemical Titan is 1.6 times less risky than Multi Spunindo. It trades about 0.0 of its potential returns per unit of risk. Multi Spunindo Jaya is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 33,240 in Multi Spunindo Jaya on November 3, 2024 and sell it today you would lose (3,040) from holding Multi Spunindo Jaya or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Titan vs. Multi Spunindo Jaya
Performance |
| Timeline |
| Lotte Chemical Titan |
| Multi Spunindo Jaya |
Lotte Chemical and Multi Spunindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Multi Spunindo
The main advantage of trading using opposite Lotte Chemical and Multi Spunindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Multi Spunindo 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 Multi Spunindo will offset losses from the drop in Multi Spunindo'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 |
| Multi Spunindo vs. Indorama Synthetics Tbk | Multi Spunindo vs. Dharma Polimetal Tbk | Multi Spunindo vs. Hero Supermarket Tbk | Multi Spunindo vs. Chandra Asri Petrochemical |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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