Correlation Between SHIN ETSU and SERI INDUSTRIAL
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU and SERI INDUSTRIAL 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 SHIN ETSU and SERI INDUSTRIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and SERI INDUSTRIAL EO, you can compare the effects of market volatilities on SHIN ETSU and SERI INDUSTRIAL 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 SHIN ETSU with a short position of SERI INDUSTRIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and SERI INDUSTRIAL.
Diversification Opportunities for SHIN ETSU and SERI INDUSTRIAL
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SHIN and SERI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO and SHIN ETSU 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 SHIN ETSU CHEMICAL are associated (or correlated) with SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of SHIN ETSU i.e., SHIN ETSU and SERI INDUSTRIAL go up and down completely randomly.
Pair Corralation between SHIN ETSU and SERI INDUSTRIAL
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 0.5 times more return on investment than SERI INDUSTRIAL. However, SHIN ETSU CHEMICAL is 2.0 times less risky than SERI INDUSTRIAL. It trades about 0.05 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about -0.02 per unit of risk. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. SERI INDUSTRIAL EO
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| SERI INDUSTRIAL EO |
SHIN ETSU and SERI INDUSTRIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and SERI INDUSTRIAL
The main advantage of trading using opposite SHIN ETSU and SERI INDUSTRIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU position performs unexpectedly, SERI INDUSTRIAL 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 SERI INDUSTRIAL will offset losses from the drop in SERI INDUSTRIAL's long position.| SHIN ETSU vs. GigaMedia | SHIN ETSU vs. ULTRA CLEAN HLDGS | SHIN ETSU vs. FRACTAL GAMING GROUP | SHIN ETSU vs. Hochschild Mining plc |
| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |