Correlation Between MCB Bank and Lotte Chemical
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By analyzing existing cross correlation between MCB Bank and Lotte Chemical Pakistan, you can compare the effects of market volatilities on MCB Bank and Lotte Chemical 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 MCB Bank with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Bank and Lotte Chemical.
Diversification Opportunities for MCB Bank and Lotte Chemical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MCB and Lotte is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MCB Bank and Lotte Chemical Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Pakistan and MCB Bank 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 MCB Bank are associated (or correlated) with Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Pakistan has no effect on the direction of MCB Bank i.e., MCB Bank and Lotte Chemical go up and down completely randomly.
Pair Corralation between MCB Bank and Lotte Chemical
Assuming the 90 days trading horizon MCB Bank is expected to generate 0.59 times more return on investment than Lotte Chemical. However, MCB Bank is 1.69 times less risky than Lotte Chemical. It trades about 0.29 of its potential returns per unit of risk. Lotte Chemical Pakistan is currently generating about 0.16 per unit of risk. If you would invest 24,371 in MCB Bank on September 5, 2024 and sell it today you would earn a total of 3,400 from holding MCB Bank or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Bank vs. Lotte Chemical Pakistan
Performance |
| Timeline |
| MCB Bank |
| Lotte Chemical Pakistan |
MCB Bank and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Bank and Lotte Chemical
The main advantage of trading using opposite MCB Bank and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Bank position performs unexpectedly, Lotte Chemical 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 Lotte Chemical will offset losses from the drop in Lotte Chemical's long position.| MCB Bank vs. Masood Textile Mills | MCB Bank vs. Fauji Foods | MCB Bank vs. KSB Pumps | MCB Bank vs. Mari Petroleum |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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