Correlation Between Shin Etsu and Broadwind
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Broadwind 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 Broadwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Etsu Chemical Co and Broadwind, you can compare the effects of market volatilities on Shin Etsu and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Broadwind.
Diversification Opportunities for Shin Etsu and Broadwind
Very good diversification
The 3 months correlation between Shin and Broadwind is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Co are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Shin Etsu i.e., Shin Etsu and Broadwind go up and down completely randomly.
Pair Corralation between Shin Etsu and Broadwind
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.5 times more return on investment than Broadwind. However, Shin Etsu Chemical Co is 2.01 times less risky than Broadwind. It trades about -0.11 of its potential returns per unit of risk. Broadwind is currently generating about -0.3 per unit of risk. If you would invest 3,160 in Shin Etsu Chemical Co on November 6, 2024 and sell it today you would lose (158.00) from holding Shin Etsu Chemical Co or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Broadwind
Performance |
| Timeline |
| Shin Etsu Chemical |
| Broadwind |
Shin Etsu and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Broadwind
The main advantage of trading using opposite Shin Etsu and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Shin Etsu vs. HYATT HOTELS A | Shin Etsu vs. Lendlease Group | Shin Etsu vs. Hyatt Hotels | Shin Etsu vs. Chesapeake Utilities |
| Broadwind vs. DATADOT TECHNOLOGY | Broadwind vs. Mitsui Chemicals | Broadwind vs. Marie Brizard Wine | Broadwind vs. NTT DATA |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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