Correlation Between Shifa International and Lotte Chemical
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By analyzing existing cross correlation between Shifa International Hospitals and Lotte Chemical Pakistan, you can compare the effects of market volatilities on Shifa International 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 Shifa International with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shifa International and Lotte Chemical.
Diversification Opportunities for Shifa International and Lotte Chemical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shifa and Lotte is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shifa International Hospitals 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 Shifa International 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 Shifa International Hospitals 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 Shifa International i.e., Shifa International and Lotte Chemical go up and down completely randomly.
Pair Corralation between Shifa International and Lotte Chemical
Assuming the 90 days trading horizon Shifa International is expected to generate 3.5 times less return on investment than Lotte Chemical. But when comparing it to its historical volatility, Shifa International Hospitals is 1.28 times less risky than Lotte Chemical. It trades about 0.12 of its potential returns per unit of risk. Lotte Chemical Pakistan is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,731 in Lotte Chemical Pakistan on September 13, 2024 and sell it today you would earn a total of 596.00 from holding Lotte Chemical Pakistan or generate 34.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shifa International Hospitals vs. Lotte Chemical Pakistan
Performance |
| Timeline |
| Shifa International |
| Lotte Chemical Pakistan |
Shifa International and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shifa International and Lotte Chemical
The main advantage of trading using opposite Shifa International and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shifa International 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.| Shifa International vs. Oil and Gas | Shifa International vs. Pakistan State Oil | Shifa International vs. Pakistan Petroleum | Shifa International vs. Fauji Fertilizer |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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