Correlation Between Alfa Financial and Shin-Etsu Chemical
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial 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 Alfa Financial Software and Shin Etsu Chemical Co, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of Shin-Etsu Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Shin-Etsu Chemical.
Diversification Opportunities for Alfa Financial and Shin-Etsu Chemical
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alfa and Shin-Etsu is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software 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 Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and Shin-Etsu Chemical go up and down completely randomly.
Pair Corralation between Alfa Financial and Shin-Etsu Chemical
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.96 times more return on investment than Shin-Etsu Chemical. However, Alfa Financial Software is 1.04 times less risky than Shin-Etsu Chemical. It trades about 0.05 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about 0.04 per unit of risk. If you would invest 167.00 in Alfa Financial Software on September 2, 2024 and sell it today you would earn a total of 91.00 from holding Alfa Financial Software or generate 54.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Alfa Financial Software |
| Shin Etsu Chemical |
Alfa Financial and Shin-Etsu Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Shin-Etsu Chemical
The main advantage of trading using opposite Alfa Financial and Shin-Etsu Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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