Correlation Between Eastman Chemical and SHIN ETSU
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and SHIN ETSU CHEMICAL , you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and SHIN ETSU.
Diversification Opportunities for Eastman Chemical and SHIN ETSU
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eastman and SHIN is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and SHIN ETSU go up and down completely randomly.
Pair Corralation between Eastman Chemical and SHIN ETSU
Assuming the 90 days horizon Eastman Chemical is expected to generate 1.42 times less return on investment than SHIN ETSU. But when comparing it to its historical volatility, Eastman Chemical is 1.19 times less risky than SHIN ETSU. It trades about 0.04 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,391 in SHIN ETSU CHEMICAL on September 3, 2024 and sell it today you would earn a total of 1,108 from holding SHIN ETSU CHEMICAL or generate 46.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| Eastman Chemical |
| SHIN ETSU CHEMICAL |
Eastman Chemical and SHIN ETSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and SHIN ETSU
The main advantage of trading using opposite Eastman Chemical and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Vulcan Materials | Eastman Chemical vs. Broadwind | Eastman Chemical vs. Transportadora de Gas | Eastman Chemical vs. URBAN OUTFITTERS |
| SHIN ETSU vs. GigaMedia | SHIN ETSU vs. ULTRA CLEAN HLDGS | SHIN ETSU vs. FRACTAL GAMING GROUP | SHIN ETSU vs. Hochschild Mining plc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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