Correlation Between Lotte Chemical and Soneri Bank
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By analyzing existing cross correlation between Lotte Chemical Pakistan and Soneri Bank, you can compare the effects of market volatilities on Lotte Chemical and Soneri Bank 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 Soneri Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Soneri Bank.
Diversification Opportunities for Lotte Chemical and Soneri Bank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotte and Soneri is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Pakistan and Soneri Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soneri Bank 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 Soneri Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soneri Bank has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Soneri Bank go up and down completely randomly.
Pair Corralation between Lotte Chemical and Soneri Bank
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 2.33 times less return on investment than Soneri Bank. In addition to that, Lotte Chemical is 1.79 times more volatile than Soneri Bank. It trades about 0.03 of its total potential returns per unit of risk. Soneri Bank is currently generating about 0.14 per unit of volatility. If you would invest 1,750 in Soneri Bank on November 4, 2024 and sell it today you would earn a total of 77.00 from holding Soneri Bank or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chemical Pakistan vs. Soneri Bank
Performance |
| Timeline |
| Lotte Chemical Pakistan |
| Soneri Bank |
Lotte Chemical and Soneri Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Soneri Bank
The main advantage of trading using opposite Lotte Chemical and Soneri Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Soneri Bank 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 Soneri Bank will offset losses from the drop in Soneri Bank's long position.| Lotte Chemical vs. Oil and Gas | Lotte Chemical vs. Unilever Pakistan Foods | Lotte Chemical vs. Askari General Insurance | Lotte Chemical vs. Ittehad Chemicals |
| Soneri Bank vs. Sitara Chemical Industries | Soneri Bank vs. Synthetic Products Enterprises | Soneri Bank vs. Pakistan Aluminium Beverage | Soneri Bank vs. IGI Life Insurance |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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