Correlation Between Lotte Chemical and Dost Steels
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By analyzing existing cross correlation between Lotte Chemical Pakistan and Dost Steels, you can compare the effects of market volatilities on Lotte Chemical and Dost Steels 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 Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Dost Steels.
Diversification Opportunities for Lotte Chemical and Dost Steels
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Dost is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Pakistan and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels 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 Dost Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dost Steels has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Dost Steels go up and down completely randomly.
Pair Corralation between Lotte Chemical and Dost Steels
Assuming the 90 days trading horizon Lotte Chemical Pakistan is expected to generate 1.29 times more return on investment than Dost Steels. However, Lotte Chemical is 1.29 times more volatile than Dost Steels. It trades about 0.16 of its potential returns per unit of risk. Dost Steels is currently generating about 0.17 per unit of risk. If you would invest 1,683 in Lotte Chemical Pakistan on August 30, 2024 and sell it today you would earn a total of 202.00 from holding Lotte Chemical Pakistan or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Pakistan vs. Dost Steels
Performance |
| Timeline |
| Lotte Chemical Pakistan |
| Dost Steels |
Lotte Chemical and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Dost Steels
The main advantage of trading using opposite Lotte Chemical and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Dost Steels 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 Dost Steels will offset losses from the drop in Dost Steels' long position.| Lotte Chemical vs. Masood Textile Mills | Lotte Chemical vs. Fauji Foods | Lotte Chemical vs. KSB Pumps | Lotte Chemical vs. Mari Petroleum |
| Dost Steels vs. Oil and Gas | Dost Steels vs. Pakistan State Oil | Dost Steels vs. Pakistan Petroleum | Dost Steels vs. Fauji Fertilizer |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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