Correlation Between Superior Plus and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Shin Etsu 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 Superior Plus and Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Shin Etsu Chemical Co, you can compare the effects of market volatilities on Superior Plus and Shin Etsu 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 Superior Plus with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Shin Etsu.
Diversification Opportunities for Superior Plus and Shin Etsu
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Superior and Shin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Shin Etsu. 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 Superior Plus i.e., Superior Plus and Shin Etsu go up and down completely randomly.
Pair Corralation between Superior Plus and Shin Etsu
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Shin Etsu. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 1.12 times less risky than Shin Etsu. The stock trades about -0.01 of its potential returns per unit of risk. The Shin Etsu Chemical Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,372 in Shin Etsu Chemical Co on September 12, 2024 and sell it today you would earn a total of 1,060 from holding Shin Etsu Chemical Co or generate 44.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Superior Plus Corp |
| Shin Etsu Chemical |
Superior Plus and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Shin Etsu
The main advantage of trading using opposite Superior Plus and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Shin Etsu 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 will offset losses from the drop in Shin Etsu's long position.| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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