Correlation Between Asahi Kaisei and Shin-Etsu Chemical
Can any of the company-specific risk be diversified away by investing in both Asahi Kaisei 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 Asahi Kaisei 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 Asahi Kaisei Corp and Shin Etsu Chemical Co, you can compare the effects of market volatilities on Asahi Kaisei 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 Asahi Kaisei with a short position of Shin-Etsu Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kaisei and Shin-Etsu Chemical.
Diversification Opportunities for Asahi Kaisei and Shin-Etsu Chemical
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asahi and Shin-Etsu is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kaisei 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 Asahi Kaisei 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 Asahi Kaisei Corp 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 Asahi Kaisei i.e., Asahi Kaisei and Shin-Etsu Chemical go up and down completely randomly.
Pair Corralation between Asahi Kaisei and Shin-Etsu Chemical
Assuming the 90 days horizon Asahi Kaisei Corp is expected to generate 1.41 times more return on investment than Shin-Etsu Chemical. However, Asahi Kaisei is 1.41 times more volatile than Shin Etsu Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.05 per unit of risk. If you would invest 1,383 in Asahi Kaisei Corp on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Asahi Kaisei Corp or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Asahi Kaisei Corp vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Asahi Kaisei Corp |
| Shin Etsu Chemical |
Asahi Kaisei and Shin-Etsu Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahi Kaisei and Shin-Etsu Chemical
The main advantage of trading using opposite Asahi Kaisei and Shin-Etsu Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Kaisei 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.| Asahi Kaisei vs. BASF SE NA | Asahi Kaisei vs. Braskem SA Class | Asahi Kaisei vs. Lsb Industries | Asahi Kaisei vs. Dow Inc |
| Shin-Etsu Chemical vs. BASF SE NA | Shin-Etsu Chemical vs. Braskem SA Class | Shin-Etsu Chemical vs. Lsb Industries | Shin-Etsu Chemical vs. Dow 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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