Correlation Between Humpuss Intermoda and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Humpuss Intermoda and Lotte Chemical 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 Humpuss Intermoda and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humpuss Intermoda Transportasi and Lotte Chemical Titan, you can compare the effects of market volatilities on Humpuss Intermoda and Lotte Chemical 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 Humpuss Intermoda with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humpuss Intermoda and Lotte Chemical.
Diversification Opportunities for Humpuss Intermoda and Lotte Chemical
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Humpuss and Lotte is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Humpuss Intermoda Transportasi and Lotte Chemical Titan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Titan and Humpuss Intermoda 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 Humpuss Intermoda Transportasi are associated (or correlated) with Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Titan has no effect on the direction of Humpuss Intermoda i.e., Humpuss Intermoda and Lotte Chemical go up and down completely randomly.
Pair Corralation between Humpuss Intermoda and Lotte Chemical
Assuming the 90 days trading horizon Humpuss Intermoda Transportasi is expected to generate 2.46 times more return on investment than Lotte Chemical. However, Humpuss Intermoda is 2.46 times more volatile than Lotte Chemical Titan. It trades about 0.1 of its potential returns per unit of risk. Lotte Chemical Titan is currently generating about -0.31 per unit of risk. If you would invest 40,600 in Humpuss Intermoda Transportasi on September 3, 2024 and sell it today you would earn a total of 2,000 from holding Humpuss Intermoda Transportasi or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humpuss Intermoda Transportasi vs. Lotte Chemical Titan
Performance |
| Timeline |
| Humpuss Intermoda |
| Lotte Chemical Titan |
Humpuss Intermoda and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humpuss Intermoda and Lotte Chemical
The main advantage of trading using opposite Humpuss Intermoda and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humpuss Intermoda position performs unexpectedly, Lotte Chemical 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 Lotte Chemical will offset losses from the drop in Lotte Chemical's long position.| Humpuss Intermoda vs. Weha Transportasi Indonesia | Humpuss Intermoda vs. Mitra Pinasthika Mustika | Humpuss Intermoda vs. Jakarta Int Hotels | Humpuss Intermoda vs. Asuransi Harta Aman |
| Lotte Chemical vs. Timah Persero Tbk | Lotte Chemical vs. Semen Indonesia Persero | Lotte Chemical vs. Mitra Pinasthika Mustika | Lotte Chemical 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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