Correlation Between Ping An and SHIN-ETSU CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Ping An 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 Ping An 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 Ping An Insurance and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on Ping An 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 Ping An with a short position of SHIN-ETSU CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and SHIN-ETSU CHEMICAL.
Diversification Opportunities for Ping An and SHIN-ETSU CHEMICAL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ping and SHIN-ETSU is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance 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 Ping An 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 Ping An Insurance 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 Ping An i.e., Ping An and SHIN-ETSU CHEMICAL go up and down completely randomly.
Pair Corralation between Ping An and SHIN-ETSU CHEMICAL
Assuming the 90 days trading horizon Ping An Insurance is expected to generate 1.86 times more return on investment than SHIN-ETSU CHEMICAL. However, Ping An is 1.86 times more volatile than SHIN ETSU CHEMICAL. It trades about 0.08 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.04 per unit of risk. If you would invest 202.00 in Ping An Insurance on August 26, 2024 and sell it today you would earn a total of 344.00 from holding Ping An Insurance or generate 170.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| Ping An Insurance |
| SHIN ETSU CHEMICAL |
Ping An and SHIN-ETSU CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and SHIN-ETSU CHEMICAL
The main advantage of trading using opposite Ping An and SHIN-ETSU CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An 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.The idea behind Ping An Insurance and SHIN ETSU CHEMICAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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