Correlation Between AIR LIQUIDE and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE 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 AIR LIQUIDE and Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR LIQUIDE ADR and Shin Etsu Chemical Co, you can compare the effects of market volatilities on AIR LIQUIDE 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 AIR LIQUIDE with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and Shin Etsu.
Diversification Opportunities for AIR LIQUIDE and Shin Etsu
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and Shin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR 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 AIR LIQUIDE 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 AIR LIQUIDE ADR 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 AIR LIQUIDE i.e., AIR LIQUIDE and Shin Etsu go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and Shin Etsu
Assuming the 90 days trading horizon AIR LIQUIDE is expected to generate 1.24 times less return on investment than Shin Etsu. But when comparing it to its historical volatility, AIR LIQUIDE ADR is 1.29 times less risky than Shin Etsu. It trades about 0.04 of its potential returns per unit of risk. 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 |
AIR LIQUIDE ADR vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| Shin Etsu Chemical |
AIR LIQUIDE and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and Shin Etsu
The main advantage of trading using opposite AIR LIQUIDE and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE 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.| AIR LIQUIDE vs. Shin Etsu Chemical Co | AIR LIQUIDE vs. Ganfeng Lithium Co | AIR LIQUIDE vs. Superior Plus Corp | AIR LIQUIDE vs. SIVERS SEMICONDUCTORS AB |
| Shin Etsu vs. AIR LIQUIDE ADR | Shin Etsu vs. Ganfeng Lithium Co | Shin Etsu vs. Superior Plus Corp | Shin Etsu vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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