Correlation Between Strategic Investments and Shin-Etsu Chemical
Can any of the company-specific risk be diversified away by investing in both Strategic Investments 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 Strategic Investments 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 Strategic Investments AS and Shin Etsu Chemical Co, you can compare the effects of market volatilities on Strategic Investments 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 Strategic Investments with a short position of Shin-Etsu Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Shin-Etsu Chemical.
Diversification Opportunities for Strategic Investments and Shin-Etsu Chemical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and Shin-Etsu is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS 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 Strategic Investments 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 Strategic Investments AS 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 Strategic Investments i.e., Strategic Investments and Shin-Etsu Chemical go up and down completely randomly.
Pair Corralation between Strategic Investments and Shin-Etsu Chemical
Assuming the 90 days horizon Strategic Investments AS is expected to generate 6.58 times more return on investment than Shin-Etsu Chemical. However, Strategic Investments is 6.58 times more volatile than Shin Etsu Chemical Co. It trades about 0.1 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.19 per unit of risk. If you would invest 12.00 in Strategic Investments AS on October 12, 2024 and sell it today you would earn a total of 1.00 from holding Strategic Investments AS or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Investments AS vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Strategic Investments |
| Shin Etsu Chemical |
Strategic Investments and Shin-Etsu Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and Shin-Etsu Chemical
The main advantage of trading using opposite Strategic Investments and Shin-Etsu Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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.| Strategic Investments vs. ADDUS HOMECARE | Strategic Investments vs. MOLSON RS BEVERAGE | Strategic Investments vs. CAIRN HOMES EO | Strategic Investments vs. CITY OFFICE REIT |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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