Correlation Between Lotte Chemical and Wah Nobel
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By analyzing existing cross correlation between Lotte Chemical Pakistan and Wah Nobel Chemicals, you can compare the effects of market volatilities on Lotte Chemical and Wah Nobel 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 Wah Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and Wah Nobel.
Diversification Opportunities for Lotte Chemical and Wah Nobel
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and Wah is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Pakistan and Wah Nobel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Nobel Chemicals 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 Wah Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Nobel Chemicals has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and Wah Nobel go up and down completely randomly.
Pair Corralation between Lotte Chemical and Wah Nobel
Assuming the 90 days trading horizon Lotte Chemical is expected to generate 7.23 times less return on investment than Wah Nobel. But when comparing it to its historical volatility, Lotte Chemical Pakistan is 1.31 times less risky than Wah Nobel. It trades about 0.01 of its potential returns per unit of risk. Wah Nobel Chemicals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,918 in Wah Nobel Chemicals on August 27, 2024 and sell it today you would earn a total of 8,106 from holding Wah Nobel Chemicals or generate 58.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 81.63% |
Values | Daily Returns |
Lotte Chemical Pakistan vs. Wah Nobel Chemicals
Performance |
Timeline |
Lotte Chemical Pakistan |
Wah Nobel Chemicals |
Lotte Chemical and Wah Nobel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lotte Chemical and Wah Nobel
The main advantage of trading using opposite Lotte Chemical and Wah Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chemical position performs unexpectedly, Wah Nobel 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 Wah Nobel will offset losses from the drop in Wah Nobel's 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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