Correlation Between Lotte Chemical and Satyamitra Kemas
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Satyamitra Kemas 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 Satyamitra Kemas 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 Satyamitra Kemas Lestari, you can compare the effects of market volatilities on Lotte Chemical and Satyamitra Kemas 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 Satyamitra Kemas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Satyamitra Kemas.
Diversification Opportunities for Lotte Chemical and Satyamitra Kemas
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Satyamitra is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Satyamitra Kemas Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satyamitra Kemas Lestari 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 Satyamitra Kemas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satyamitra Kemas Lestari has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Satyamitra Kemas go up and down completely randomly.
Pair Corralation between Lotte Chemical and Satyamitra Kemas
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 4.72 times less return on investment than Satyamitra Kemas. But when comparing it to its historical volatility, Lotte Chemical Titan is 2.2 times less risky than Satyamitra Kemas. It trades about 0.06 of its potential returns per unit of risk. Satyamitra Kemas Lestari is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 15,900 in Satyamitra Kemas Lestari on October 7, 2024 and sell it today you would earn a total of 800.00 from holding Satyamitra Kemas Lestari or generate 5.03% 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. Satyamitra Kemas Lestari
Performance |
| Timeline |
| Lotte Chemical Titan |
| Satyamitra Kemas Lestari |
Lotte Chemical and Satyamitra Kemas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Satyamitra Kemas
The main advantage of trading using opposite Lotte Chemical and Satyamitra Kemas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Satyamitra Kemas 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 Satyamitra Kemas will offset losses from the drop in Satyamitra Kemas' 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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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