Correlation Between SHIN-ETSU CHEMICAL and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and Sekisui 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 SHIN-ETSU CHEMICAL and Sekisui Chemical 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 Sekisui Chemical Co, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Sekisui 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 SHIN-ETSU CHEMICAL with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Sekisui Chemical.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Sekisui Chemical
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between SHIN-ETSU and Sekisui is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and SHIN-ETSU CHEMICAL 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Sekisui Chemical go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Sekisui Chemical
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the Sekisui Chemical. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 1.1 times less risky than Sekisui Chemical. The stock trades about -0.09 of its potential returns per unit of risk. The Sekisui Chemical Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Sekisui Chemical Co on September 2, 2024 and sell it today you would earn a total of 160.00 from holding Sekisui Chemical Co or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Sekisui Chemical Co
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Sekisui Chemical |
SHIN-ETSU CHEMICAL and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Sekisui Chemical
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, Sekisui 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.| 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 |
| Sekisui Chemical vs. XLMedia PLC | Sekisui Chemical vs. USWE SPORTS AB | Sekisui Chemical vs. PLAYTECH | Sekisui Chemical vs. Playtech plc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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