Correlation Between G6 Materials and Shin-Etsu Chemical
Can any of the company-specific risk be diversified away by investing in both G6 Materials 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 G6 Materials 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 G6 Materials Corp and Shin Etsu Chemical Co, you can compare the effects of market volatilities on G6 Materials 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 G6 Materials with a short position of Shin-Etsu Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of G6 Materials and Shin-Etsu Chemical.
Diversification Opportunities for G6 Materials and Shin-Etsu Chemical
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GPHBF and Shin-Etsu is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding G6 Materials Corp 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 G6 Materials 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 G6 Materials Corp 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 G6 Materials i.e., G6 Materials and Shin-Etsu Chemical go up and down completely randomly.
Pair Corralation between G6 Materials and Shin-Etsu Chemical
Assuming the 90 days horizon G6 Materials Corp is expected to under-perform the Shin-Etsu Chemical. In addition to that, G6 Materials is 2.67 times more volatile than Shin Etsu Chemical Co. It trades about -0.01 of its total potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about 0.04 per unit of volatility. If you would invest 3,234 in Shin Etsu Chemical Co on September 5, 2024 and sell it today you would earn a total of 620.00 from holding Shin Etsu Chemical Co or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G6 Materials Corp vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| G6 Materials Corp |
| Shin Etsu Chemical |
G6 Materials and Shin-Etsu Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G6 Materials and Shin-Etsu Chemical
The main advantage of trading using opposite G6 Materials and Shin-Etsu Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G6 Materials 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.| G6 Materials vs. Sherwin Williams Co | G6 Materials vs. Air Liquide SA | G6 Materials vs. Air Products and | G6 Materials vs. Ecolab Inc |
| Shin-Etsu Chemical vs. Kuraray Co | Shin-Etsu Chemical vs. Mitsubishi Chemical Holdings | Shin-Etsu Chemical vs. Sumitomo Chemical Co | Shin-Etsu Chemical 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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