Correlation Between Shin-Etsu Chemical and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Air Liquide 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 Air Liquide 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 Air Liquide SA, you can compare the effects of market volatilities on Shin-Etsu Chemical and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Air Liquide.
Diversification Opportunities for Shin-Etsu Chemical and Air Liquide
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shin-Etsu and Air is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Co are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Air Liquide go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Air Liquide
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Air Liquide. In addition to that, Shin-Etsu Chemical is 2.5 times more volatile than Air Liquide SA. It trades about -0.12 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.27 per unit of volatility. If you would invest 15,850 in Air Liquide SA on November 9, 2024 and sell it today you would earn a total of 884.00 from holding Air Liquide SA or generate 5.58% 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 Co vs. Air Liquide SA
Performance |
| Timeline |
| Shin Etsu Chemical |
| Air Liquide SA |
Shin-Etsu Chemical and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Air Liquide
The main advantage of trading using opposite Shin-Etsu Chemical and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Shin-Etsu Chemical vs. EAGLE MATERIALS | Shin-Etsu Chemical vs. The Yokohama Rubber | Shin-Etsu Chemical vs. Thai Beverage Public | Shin-Etsu Chemical vs. PATTIES FOODS |
| Air Liquide vs. Harmony Gold Mining | Air Liquide vs. DISTRICT METALS | Air Liquide vs. Perseus Mining Limited | Air Liquide vs. Sanyo Chemical Industries |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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