Correlation Between KL Technology and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both KL Technology 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 KL Technology and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KL Technology and Lotte Chemical Titan, you can compare the effects of market volatilities on KL Technology 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 KL Technology with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KL Technology and Lotte Chemical.
Diversification Opportunities for KL Technology and Lotte Chemical
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KLTE and Lotte is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KL Technology 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 KL Technology 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 KL Technology 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 KL Technology i.e., KL Technology and Lotte Chemical go up and down completely randomly.
Pair Corralation between KL Technology and Lotte Chemical
Assuming the 90 days trading horizon KL Technology is expected to generate 0.71 times more return on investment than Lotte Chemical. However, KL Technology is 1.41 times less risky than Lotte Chemical. It trades about 0.08 of its potential returns per unit of risk. Lotte Chemical Titan is currently generating about -0.52 per unit of risk. If you would invest 5,893 in KL Technology on August 28, 2024 and sell it today you would earn a total of 139.00 from holding KL Technology or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KL Technology vs. Lotte Chemical Titan
Performance |
| Timeline |
KL Technology and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
KL Technology
Pair trading matchups for KL Technology
Lotte Chemical Titan
Pair trading matchups for Lotte Chemical
Pair Trading with KL Technology and Lotte Chemical
The main advantage of trading using opposite KL Technology and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KL Technology 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.| KL Technology vs. SFP Tech Holdings | KL Technology vs. Radiant Globaltech Bhd | KL Technology vs. Computer Forms Bhd | KL Technology vs. Shangri La Hotels |
| Lotte Chemical vs. Digistar Bhd | Lotte Chemical vs. Minetech Resources Bhd | Lotte Chemical vs. OpenSys M Bhd | Lotte Chemical vs. Insas Bhd |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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