Correlation Between AdvanSix and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both AdvanSix 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 AdvanSix and Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvanSix and Shin Etsu Chemical Co, you can compare the effects of market volatilities on AdvanSix 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 AdvanSix with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and Shin Etsu.
Diversification Opportunities for AdvanSix and Shin Etsu
Significant diversification
The 3 months correlation between AdvanSix and Shin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix 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 AdvanSix 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 AdvanSix 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 AdvanSix i.e., AdvanSix and Shin Etsu go up and down completely randomly.
Pair Corralation between AdvanSix and Shin Etsu
Given the investment horizon of 90 days AdvanSix is expected to generate 1.65 times more return on investment than Shin Etsu. However, AdvanSix is 1.65 times more volatile than Shin Etsu Chemical Co. It trades about 0.15 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.11 per unit of risk. If you would invest 2,900 in AdvanSix on August 24, 2024 and sell it today you would earn a total of 213.00 from holding AdvanSix or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvanSix vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| AdvanSix |
| Shin Etsu Chemical |
AdvanSix and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvanSix and Shin Etsu
The main advantage of trading using opposite AdvanSix and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvanSix 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.| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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