Correlation Between Lotte Chemical and PTT Synergy

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

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

Diversification Opportunities for Lotte Chemical and PTT Synergy

-0.69

Correlation Coefficient

Lotte Chemical  PTT Synergy

Excellent diversification

The 3 months correlation between Lotte and PTT is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and PTT Synergy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Synergy Group and Lotte Chemical 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 Chemical Titan are associated (or correlated) with PTT Synergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Synergy Group has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and PTT Synergy go up and down completely randomly.

Pair Corralation between Lotte Chemical and PTT Synergy

Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the PTT Synergy. In addition to that, Lotte Chemical is 1.1 times more volatile than PTT Synergy Group. It trades about -0.29 of its total potential returns per unit of risk. PTT Synergy Group is currently generating about 0.1 per unit of volatility. If you would invest  112.00  in PTT Synergy Group on December 8, 2024 and sell it today you would earn a total of  16.00  from holding PTT Synergy Group or generate 14.29% return on investment over 90 days.

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

Lotte Chemical Titan  vs.  PTT Synergy Group

Lotte Chemical Titan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lotte Chemical Titan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PTT Synergy Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Synergy Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PTT Synergy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lotte Chemical and PTT Synergy

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

The idea behind Lotte Chemical Titan and PTT Synergy Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.