Correlation Between Japan Asia and SHIN ETSU
Can any of the company-specific risk be diversified away by investing in both Japan Asia 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 Japan Asia and SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on Japan Asia 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 Japan Asia with a short position of SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and SHIN ETSU.
Diversification Opportunities for Japan Asia and SHIN ETSU
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Japan and SHIN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment 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 Japan Asia 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 Japan Asia Investment 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 Japan Asia i.e., Japan Asia and SHIN ETSU go up and down completely randomly.
Pair Corralation between Japan Asia and SHIN ETSU
Assuming the 90 days horizon Japan Asia is expected to generate 1.29 times less return on investment than SHIN ETSU. In addition to that, Japan Asia is 1.52 times more volatile than SHIN ETSU CHEMICAL. It trades about 0.01 of its total potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.01 per unit of volatility. If you would invest 3,460 in SHIN ETSU CHEMICAL on September 12, 2024 and sell it today you would lose (34.00) from holding SHIN ETSU CHEMICAL or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| Japan Asia Investment |
| SHIN ETSU CHEMICAL |
Japan Asia and SHIN ETSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and SHIN ETSU
The main advantage of trading using opposite Japan Asia and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia 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.| Japan Asia vs. Ameriprise Financial | Japan Asia vs. Ares Management Corp | Japan Asia vs. Superior Plus Corp | Japan Asia vs. SIVERS SEMICONDUCTORS AB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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