Correlation Between Shin Etsu and AIR LIQUIDE
Can any of the company-specific risk be diversified away by investing in both Shin Etsu 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 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 ADR, you can compare the effects of market volatilities on Shin Etsu 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 with a short position of AIR LIQUIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and AIR LIQUIDE.
Diversification Opportunities for Shin Etsu and AIR LIQUIDE
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and AIR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR 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 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 ADR has no effect on the direction of Shin Etsu i.e., Shin Etsu and AIR LIQUIDE go up and down completely randomly.
Pair Corralation between Shin Etsu and AIR LIQUIDE
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 1.37 times more return on investment than AIR LIQUIDE. However, Shin Etsu is 1.37 times more volatile than AIR LIQUIDE ADR. It trades about 0.04 of its potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.02 per unit of risk. If you would invest 2,820 in Shin Etsu Chemical Co on September 12, 2024 and sell it today you would earn a total of 612.00 from holding Shin Etsu Chemical Co or generate 21.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. AIR LIQUIDE ADR
Performance |
| Timeline |
| Shin Etsu Chemical |
| AIR LIQUIDE ADR |
Shin Etsu and AIR LIQUIDE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and AIR LIQUIDE
The main advantage of trading using opposite Shin Etsu and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu 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 vs. AIR LIQUIDE ADR | Shin Etsu vs. Ganfeng Lithium Co | Shin Etsu vs. Superior Plus Corp | Shin Etsu vs. SIVERS SEMICONDUCTORS AB |
| AIR LIQUIDE vs. Shin Etsu Chemical Co | AIR LIQUIDE vs. Ganfeng Lithium Co | AIR LIQUIDE vs. Superior Plus Corp | AIR LIQUIDE vs. SIVERS SEMICONDUCTORS AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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