Correlation Between Lotte Fine and Orbitech

Can any of the company-specific risk be diversified away by investing in both Lotte Fine and Orbitech 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 Lotte Fine and Orbitech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lotte Fine Chemical and Orbitech Co, you can compare the effects of market volatilities on Lotte Fine and Orbitech 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 Lotte Fine with a short position of Orbitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Fine and Orbitech.

Diversification Opportunities for Lotte Fine and Orbitech

0.39

Correlation Coefficient

Lotte Fine  Orbitech

Weak diversification

The 3 months correlation between Lotte and Orbitech is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Fine Chemical and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and Lotte Fine 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 Lotte Fine Chemical are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of Lotte Fine i.e., Lotte Fine and Orbitech go up and down completely randomly.

Pair Corralation between Lotte Fine and Orbitech

Assuming the 90 days trading horizon Lotte Fine Chemical is expected to under-perform the Orbitech. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Fine Chemical is 1.16 times less risky than Orbitech. The stock trades about -0.11 of its potential returns per unit of risk. The Orbitech Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  239,000  in Orbitech Co on October 3, 2024 and sell it today you would lose (46,800) from holding Orbitech Co or give up 19.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lotte Fine Chemical  vs.  Orbitech Co

Lotte Fine Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotte Fine Chemical 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.

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbitech Co 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.

Pair Trading with Lotte Fine and Orbitech

The main advantage of trading using opposite Lotte Fine and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Fine position performs unexpectedly, Orbitech 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 Orbitech will offset losses from the drop in Orbitech's long position.

The idea behind Lotte Fine Chemical and Orbitech Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.