Correlation Between Lotte Chemical and PT Data

Can any of the company-specific risk be diversified away by investing in both Lotte Chemical and PT Data 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 PT Data 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 PT Data Sinergitama, you can compare the effects of market volatilities on Lotte Chemical and PT Data 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 PT Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chemical and PT Data.

Diversification Opportunities for Lotte Chemical and PT Data

0.22

Correlation Coefficient

Lotte Chemical  PT Data

Modest diversification

The 3 months correlation between Lotte and ELIT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chemical Titan and PT Data Sinergitama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Data Sinergitama 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 PT Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Data Sinergitama has no effect on the direction of Lotte Chemical i.e., Lotte Chemical and PT Data go up and down completely randomly.

Pair Corralation between Lotte Chemical and PT Data

Assuming the 90 days trading horizon Lotte Chemical Titan is expected to under-perform the PT Data. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chemical Titan is 2.35 times less risky than PT Data. The stock trades about -0.14 of its potential returns per unit of risk. The PT Data Sinergitama is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  14,400  in PT Data Sinergitama on October 25, 2024 and sell it today you would lose (1,500) from holding PT Data Sinergitama or give up 10.42% of portfolio value over 90 days.

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

Lotte Chemical Titan  vs.  PT Data Sinergitama

Lotte Chemical Titan

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PT Data Sinergitama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Data Sinergitama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Lotte Chemical and PT Data

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

The idea behind Lotte Chemical Titan and PT Data Sinergitama 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.