Correlation Between Celanese and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both Celanese 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 Celanese and Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celanese and Shin Etsu Chemical Co, you can compare the effects of market volatilities on Celanese 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 Celanese with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Shin Etsu.
Diversification Opportunities for Celanese and Shin Etsu
Poor diversification
The 3 months correlation between Celanese and Shin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Celanese 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 Celanese 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 Celanese 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 Celanese i.e., Celanese and Shin Etsu go up and down completely randomly.
Pair Corralation between Celanese and Shin Etsu
Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Shin Etsu. In addition to that, Celanese is 1.44 times more volatile than Shin Etsu Chemical Co. It trades about -0.37 of its total potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about 0.02 per unit of volatility. If you would invest 3,803 in Shin Etsu Chemical Co on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Shin Etsu Chemical Co or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Celanese vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Celanese |
| Shin Etsu Chemical |
Celanese and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celanese and Shin Etsu
The main advantage of trading using opposite Celanese and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese 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.| Celanese vs. Tronox Holdings PLC | Celanese vs. Green Plains Renewable | Celanese vs. Lsb Industries | Celanese vs. Valhi Inc |
| Shin Etsu vs. Kuraray Co | Shin Etsu vs. Mitsubishi Chemical Holdings | Shin Etsu vs. Sumitomo Chemical Co | Shin Etsu vs. Valhi 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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