Correlation Between Timah Persero and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Timah Persero 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 Timah Persero and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timah Persero Tbk and Lotte Chemical Titan, you can compare the effects of market volatilities on Timah Persero 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 Timah Persero with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Lotte Chemical.
Diversification Opportunities for Timah Persero and Lotte Chemical
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Timah and Lotte is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk 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 Timah Persero 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 Timah Persero Tbk 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 Timah Persero i.e., Timah Persero and Lotte Chemical go up and down completely randomly.
Pair Corralation between Timah Persero and Lotte Chemical
Assuming the 90 days trading horizon Timah Persero Tbk is expected to under-perform the Lotte Chemical. In addition to that, Timah Persero is 3.65 times more volatile than Lotte Chemical Titan. It trades about -0.29 of its total potential returns per unit of risk. Lotte Chemical Titan is currently generating about -0.36 per unit of volatility. If you would invest 20,200 in Lotte Chemical Titan on September 4, 2024 and sell it today you would lose (1,700) from holding Lotte Chemical Titan or give up 8.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timah Persero Tbk vs. Lotte Chemical Titan
Performance |
| Timeline |
| Timah Persero Tbk |
| Lotte Chemical Titan |
Timah Persero and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Lotte Chemical
The main advantage of trading using opposite Timah Persero and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero 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.| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
| Lotte Chemical vs. Timah Persero Tbk | Lotte Chemical vs. Semen Indonesia Persero | Lotte Chemical vs. Mitra Pinasthika Mustika | Lotte Chemical vs. Jakarta Int Hotels |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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