Correlation Between Satyamitra Kemas and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Satyamitra Kemas and Lotte Chemical 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 Satyamitra Kemas and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Satyamitra Kemas Lestari and Lotte Chemical Titan, you can compare the effects of market volatilities on Satyamitra Kemas 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 Satyamitra Kemas with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satyamitra Kemas and Lotte Chemical.
Diversification Opportunities for Satyamitra Kemas and Lotte Chemical
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Satyamitra and Lotte is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Satyamitra Kemas Lestari and Lotte Chemical Titan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Titan and Satyamitra Kemas 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 Satyamitra Kemas Lestari 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 Titan has no effect on the direction of Satyamitra Kemas i.e., Satyamitra Kemas and Lotte Chemical go up and down completely randomly.
Pair Corralation between Satyamitra Kemas and Lotte Chemical
Assuming the 90 days trading horizon Satyamitra Kemas Lestari is expected to under-perform the Lotte Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Satyamitra Kemas Lestari is 2.36 times less risky than Lotte Chemical. The stock trades about -0.16 of its potential returns per unit of risk. The Lotte Chemical Titan is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,400 in Lotte Chemical Titan on September 12, 2024 and sell it today you would earn a total of 1,200 from holding Lotte Chemical Titan or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Satyamitra Kemas Lestari vs. Lotte Chemical Titan
Performance |
| Timeline |
| Satyamitra Kemas Lestari |
| Lotte Chemical Titan |
Satyamitra Kemas and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Satyamitra Kemas and Lotte Chemical
The main advantage of trading using opposite Satyamitra Kemas and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Satyamitra Kemas 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.| Satyamitra Kemas vs. Lotte Chemical Titan | Satyamitra Kemas vs. Agro Yasa Lestari | Satyamitra Kemas vs. Era Mandiri Cemerlang | Satyamitra Kemas vs. Jasnita Telekomindo Tbk |
| Lotte Chemical vs. Kedaung Indah Can | Lotte Chemical vs. Kabelindo Murni Tbk | Lotte Chemical vs. Champion Pacific Indonesia | Lotte Chemical vs. Bhuwanatala Indah Permai |
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.
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