Correlation Between Lotte Chemical and United Bank
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By analyzing existing cross correlation between Lotte Chemical Pakistan and United Bank, you can compare the effects of market volatilities on Lotte Chemical and United 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 United Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and United Bank.
Diversification Opportunities for Lotte Chemical and United Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Pakistan and United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bank has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and United Bank go up and down completely randomly.
Pair Corralation between Lotte Chemical and United Bank
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 1.1 times less return on investment than United Bank. In addition to that, Lotte Chemical is 1.74 times more volatile than United Bank. It trades about 0.17 of its total potential returns per unit of risk. United Bank is currently generating about 0.33 per unit of volatility. If you would invest 35,450 in United Bank on October 24, 2024 and sell it today you would earn a total of 3,788 from holding United Bank or generate 10.69% 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. United Bank
Performance |
| Timeline |
| Lotte Chemical Pakistan |
| United Bank |
Lotte Chemical and United Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chemical and United Bank
The main advantage of trading using opposite Lotte Chemical and United Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, United 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 United Bank will offset losses from the drop in United Bank's long position.| Lotte Chemical vs. Universal Insurance | Lotte Chemical vs. EFU General Insurance | Lotte Chemical vs. Ghandhara Automobile | Lotte Chemical vs. JS Global Banking |
| United Bank vs. Amreli Steels | United Bank vs. International Steels | United Bank vs. Hi Tech Lubricants | United Bank vs. Ghandhara Automobile |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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