Correlation Between Nimir Industrial and Lotte Chemical
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By analyzing existing cross correlation between Nimir Industrial Chemical and Lotte Chemical Pakistan, you can compare the effects of market volatilities on Nimir Industrial 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 Nimir Industrial with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and Lotte Chemical.
Diversification Opportunities for Nimir Industrial and Lotte Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nimir and Lotte is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical 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 Nimir Industrial 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 Nimir Industrial Chemical 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 Nimir Industrial i.e., Nimir Industrial and Lotte Chemical go up and down completely randomly.
Pair Corralation between Nimir Industrial and Lotte Chemical
Assuming the 90 days trading horizon Nimir Industrial is expected to generate 1.17 times less return on investment than Lotte Chemical. But when comparing it to its historical volatility, Nimir Industrial Chemical is 1.73 times less risky than Lotte Chemical. It trades about 0.23 of its potential returns per unit of risk. Lotte Chemical Pakistan is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,683 in Lotte Chemical Pakistan on August 30, 2024 and sell it today you would earn a total of 202.00 from holding Lotte Chemical Pakistan or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. Lotte Chemical Pakistan
Performance |
| Timeline |
| Nimir Industrial Chemical |
| Lotte Chemical Pakistan |
Nimir Industrial and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and Lotte Chemical
The main advantage of trading using opposite Nimir Industrial and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial 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.| Nimir Industrial vs. Oil and Gas | Nimir Industrial vs. Sitara Chemical Industries | Nimir Industrial vs. Ghandhara Automobile | Nimir Industrial vs. Air Link Communication |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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