Correlation Between SERI INDUSTRIAL and SHIN-ETSU CHEMICAL
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO and SHIN ETSU CHEMICAL , you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of SHIN-ETSU CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and SHIN-ETSU CHEMICAL.
Diversification Opportunities for SERI INDUSTRIAL and SHIN-ETSU CHEMICAL
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SERI and SHIN-ETSU is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and SHIN-ETSU CHEMICAL go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and SHIN-ETSU CHEMICAL
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to generate 3.97 times more return on investment than SHIN-ETSU CHEMICAL. However, SERI INDUSTRIAL is 3.97 times more volatile than SHIN ETSU CHEMICAL . It trades about 0.05 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.14 per unit of risk. If you would invest 280.00 in SERI INDUSTRIAL EO on September 1, 2024 and sell it today you would earn a total of 8.00 from holding SERI INDUSTRIAL EO or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| SHIN ETSU CHEMICAL |
SERI INDUSTRIAL and SHIN-ETSU CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and SHIN-ETSU CHEMICAL
The main advantage of trading using opposite SERI INDUSTRIAL and SHIN-ETSU CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| SHIN-ETSU CHEMICAL vs. SIVERS SEMICONDUCTORS AB | SHIN-ETSU CHEMICAL vs. Darden Restaurants | SHIN-ETSU CHEMICAL vs. Reliance Steel Aluminum | SHIN-ETSU CHEMICAL vs. Q2M Managementberatung AG |
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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