Correlation Between Shiny Chemical and HIM International
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and HIM International 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 Shiny Chemical and HIM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiny Chemical Industrial and HIM International Music, you can compare the effects of market volatilities on Shiny Chemical and HIM International 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 Shiny Chemical with a short position of HIM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and HIM International.
Diversification Opportunities for Shiny Chemical and HIM International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shiny and HIM is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and HIM International Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIM International Music and Shiny 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 Shiny Chemical Industrial are associated (or correlated) with HIM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIM International Music has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and HIM International go up and down completely randomly.
Pair Corralation between Shiny Chemical and HIM International
Assuming the 90 days trading horizon Shiny Chemical is expected to generate 1.35 times less return on investment than HIM International. In addition to that, Shiny Chemical is 1.02 times more volatile than HIM International Music. It trades about 0.05 of its total potential returns per unit of risk. HIM International Music is currently generating about 0.06 per unit of volatility. If you would invest 7,412 in HIM International Music on August 30, 2024 and sell it today you would earn a total of 4,738 from holding HIM International Music or generate 63.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. HIM International Music
Performance |
| Timeline |
| Shiny Chemical Industrial |
| HIM International Music |
Shiny Chemical and HIM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and HIM International
The main advantage of trading using opposite Shiny Chemical and HIM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, HIM International 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 HIM International will offset losses from the drop in HIM International's long position.| Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. TTET Union Corp | Shiny Chemical vs. Eternal Materials Co | Shiny Chemical vs. Yung Chi Paint |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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