Correlation Between Pato Chemical and Lohakit Metal
Can any of the company-specific risk be diversified away by investing in both Pato Chemical and Lohakit Metal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pato Chemical and Lohakit Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pato Chemical Industry and Lohakit Metal Public, you can compare the effects of market volatilities on Pato Chemical and Lohakit Metal 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 Pato Chemical with a short position of Lohakit Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pato Chemical and Lohakit Metal.
Diversification Opportunities for Pato Chemical and Lohakit Metal
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pato and Lohakit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pato Chemical Industry and Lohakit Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lohakit Metal Public and Pato 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 Pato Chemical Industry are associated (or correlated) with Lohakit Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lohakit Metal Public has no effect on the direction of Pato Chemical i.e., Pato Chemical and Lohakit Metal go up and down completely randomly.
Pair Corralation between Pato Chemical and Lohakit Metal
Assuming the 90 days trading horizon Pato Chemical Industry is expected to generate 0.85 times more return on investment than Lohakit Metal. However, Pato Chemical Industry is 1.18 times less risky than Lohakit Metal. It trades about -0.02 of its potential returns per unit of risk. Lohakit Metal Public is currently generating about -0.02 per unit of risk. If you would invest 898.00 in Pato Chemical Industry on September 4, 2024 and sell it today you would lose (48.00) from holding Pato Chemical Industry or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.42% |
| Values | Daily Returns |
Pato Chemical Industry vs. Lohakit Metal Public
Performance |
| Timeline |
| Pato Chemical Industry |
| Lohakit Metal Public |
Pato Chemical and Lohakit Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pato Chemical and Lohakit Metal
The main advantage of trading using opposite Pato Chemical and Lohakit Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pato Chemical position performs unexpectedly, Lohakit Metal 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 Lohakit Metal will offset losses from the drop in Lohakit Metal's long position.The idea behind Pato Chemical Industry and Lohakit Metal Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lohakit Metal vs. MCS Steel Public | Lohakit Metal vs. Asia Plus Group | Lohakit Metal vs. Lam Soon Public | Lohakit Metal vs. KGI Securities Public |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges |