Correlation Between Sung Bo and Lotte Chemical

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Can any of the company-specific risk be diversified away by investing in both Sung Bo 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 Sung Bo and Lotte Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and Lotte Chemical Corp, you can compare the effects of market volatilities on Sung Bo 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 Sung Bo with a short position of Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Lotte Chemical.

Diversification Opportunities for Sung Bo and Lotte Chemical

SungLotteDiversified AwaySungLotteDiversified Away100%
0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Sung and Lotte is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Lotte Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Corp and Sung Bo 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 Sung Bo Chemicals 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 Corp has no effect on the direction of Sung Bo i.e., Sung Bo and Lotte Chemical go up and down completely randomly.

Pair Corralation between Sung Bo and Lotte Chemical

Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.21 times more return on investment than Lotte Chemical. However, Sung Bo Chemicals is 4.71 times less risky than Lotte Chemical. It trades about 0.01 of its potential returns per unit of risk. Lotte Chemical Corp is currently generating about -0.17 per unit of risk. If you would invest  248,791  in Sung Bo Chemicals on October 25, 2024 and sell it today you would earn a total of  1,209  from holding Sung Bo Chemicals or generate 0.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sung Bo Chemicals  vs.  Lotte Chemical Corp

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -30-20-10010
JavaScript chart by amCharts 3.21.15003080 011170
       Timeline  
Sung Bo Chemicals 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sung Bo Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sung Bo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2,3502,4002,4502,5002,550
Lotte Chemical Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lotte Chemical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan60,00065,00070,00075,00080,00085,00090,00095,000100,000

Sung Bo and Lotte Chemical Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.45-1.84-1.22-0.610.01040.621.251.872.49 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15003080 011170
       Returns  

Pair Trading with Sung Bo and Lotte Chemical

The main advantage of trading using opposite Sung Bo and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo 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.
The idea behind Sung Bo Chemicals and Lotte Chemical Corp 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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