Correlation Between Lotte Chemical and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on Lotte Chemical and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Timah Persero.
Diversification Opportunities for Lotte Chemical and Timah Persero
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Timah is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Timah Persero go up and down completely randomly.
Pair Corralation between Lotte Chemical and Timah Persero
Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the Timah Persero. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 1.46 times less risky than Timah Persero. The stock trades about -0.01 of its potential returns per unit of risk. The Timah Persero Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 113,267 in Timah Persero Tbk on September 4, 2024 and sell it today you would lose (8,767) from holding Timah Persero Tbk or give up 7.74% 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. Timah Persero Tbk
Performance |
| Timeline |
| Lotte Chemical Titan |
| Timah Persero Tbk |
Lotte Chemical and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Timah Persero
The main advantage of trading using opposite Lotte Chemical and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero'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 |
| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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