Correlation Between PPHE HOTEL and SHIN-ETSU CHEMICAL
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and SHIN-ETSU 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 PPHE HOTEL and SHIN-ETSU CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE HOTEL GROUP and SHIN ETSU CHEMICAL , you can compare the effects of market volatilities on PPHE HOTEL and SHIN-ETSU 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 PPHE HOTEL with a short position of SHIN-ETSU CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and SHIN-ETSU CHEMICAL.
Diversification Opportunities for PPHE HOTEL and SHIN-ETSU CHEMICAL
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PPHE and SHIN-ETSU is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL and PPHE HOTEL 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 PPHE HOTEL GROUP are associated (or correlated) with SHIN-ETSU CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and SHIN-ETSU CHEMICAL go up and down completely randomly.
Pair Corralation between PPHE HOTEL and SHIN-ETSU CHEMICAL
Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 1.38 times more return on investment than SHIN-ETSU CHEMICAL. However, PPHE HOTEL is 1.38 times more volatile than SHIN ETSU CHEMICAL . It trades about 0.28 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.08 per unit of risk. If you would invest 1,410 in PPHE HOTEL GROUP on September 14, 2024 and sell it today you would earn a total of 180.00 from holding PPHE HOTEL GROUP or generate 12.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| SHIN ETSU CHEMICAL |
PPHE HOTEL and SHIN-ETSU CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and SHIN-ETSU CHEMICAL
The main advantage of trading using opposite PPHE HOTEL and SHIN-ETSU CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, SHIN-ETSU 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 SHIN-ETSU CHEMICAL will offset losses from the drop in SHIN-ETSU CHEMICAL's long position.The idea behind PPHE HOTEL GROUP and SHIN ETSU CHEMICAL 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.| SHIN-ETSU CHEMICAL vs. Dalata Hotel Group | SHIN-ETSU CHEMICAL vs. Ryanair Holdings plc | SHIN-ETSU CHEMICAL vs. Fair Isaac Corp | SHIN-ETSU CHEMICAL vs. PPHE HOTEL GROUP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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