Correlation Between Lotte Chemical and Dow Jones
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By analyzing existing cross correlation between Lotte Chemical Pakistan and Dow Jones Industrial, you can compare the effects of market volatilities on Lotte Chemical and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Dow Jones.
Diversification Opportunities for Lotte Chemical and Dow Jones
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Dow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Pakistan and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Pakistan are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Dow Jones go up and down completely randomly.
Pair Corralation between Lotte Chemical and Dow Jones
Assuming the 90 days trading horizon Lotte Chemical Pakistan is expected to generate 3.25 times more return on investment than Dow Jones. However, Lotte Chemical is 3.25 times more volatile than Dow Jones Industrial. It trades about 0.24 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 1,674 in Lotte Chemical Pakistan on August 28, 2024 and sell it today you would earn a total of 278.00 from holding Lotte Chemical Pakistan or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Pakistan vs. Dow Jones Industrial
Performance |
| Timeline |
Lotte Chemical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lotte Chemical Pakistan
Pair trading matchups for Lotte Chemical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lotte Chemical and Dow Jones
The main advantage of trading using opposite Lotte Chemical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lotte Chemical vs. Masood Textile Mills | Lotte Chemical vs. Fauji Foods | Lotte Chemical vs. KSB Pumps | Lotte Chemical vs. Mari Petroleum |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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