Correlation Between Lotte Chemical and Treet
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By analyzing existing cross correlation between Lotte Chemical Pakistan and Treet, you can compare the effects of market volatilities on Lotte Chemical and Treet 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 Treet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Treet.
Diversification Opportunities for Lotte Chemical and Treet
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Treet is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Pakistan and Treet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treet 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 Treet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treet has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Treet go up and down completely randomly.
Pair Corralation between Lotte Chemical and Treet
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 2.18 times less return on investment than Treet. But when comparing it to its historical volatility, Lotte Chemical Pakistan is 1.08 times less risky than Treet. It trades about 0.13 of its potential returns per unit of risk. Treet is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,402 in Treet on September 2, 2024 and sell it today you would earn a total of 327.00 from holding Treet or generate 23.32% 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. Treet
Performance |
| Timeline |
| Lotte Chemical Pakistan |
| Treet |
Lotte Chemical and Treet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and Treet
The main advantage of trading using opposite Lotte Chemical and Treet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Treet 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 Treet will offset losses from the drop in Treet's long position.| Lotte Chemical vs. Masood Textile Mills | Lotte Chemical vs. Fauji Foods | Lotte Chemical vs. KSB Pumps | Lotte Chemical vs. Mari Petroleum |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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