Correlation Between Shin Etsu and Peak Resources
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Peak Resources 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 Peak Resources 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 Peak Resources Limited, you can compare the effects of market volatilities on Shin Etsu and Peak Resources 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 Peak Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Peak Resources.
Diversification Opportunities for Shin Etsu and Peak Resources
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin and Peak is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources 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 Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of Shin Etsu i.e., Shin Etsu and Peak Resources go up and down completely randomly.
Pair Corralation between Shin Etsu and Peak Resources
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Peak Resources. But the stock apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 6.34 times less risky than Peak Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Peak Resources Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.05 in Peak Resources Limited on September 14, 2024 and sell it today you would earn a total of 0.50 from holding Peak Resources Limited or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Peak Resources Limited
Performance |
| Timeline |
| Shin Etsu Chemical |
| Peak Resources |
Shin Etsu and Peak Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Peak Resources
The main advantage of trading using opposite Shin Etsu and Peak Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Peak Resources 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 Peak Resources will offset losses from the drop in Peak Resources' long position.| Shin Etsu vs. Perseus Mining Limited | Shin Etsu vs. GALENA MINING LTD | Shin Etsu vs. PSI Software AG | Shin Etsu vs. CyberArk Software |
| Peak Resources vs. Siamgas And Petrochemicals | Peak Resources vs. Public Storage | Peak Resources vs. Casio Computer CoLtd | Peak Resources vs. Datang International Power |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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