Correlation Between Shin Etsu and Mitsubishi Gas
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Mitsubishi Gas 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 Mitsubishi Gas 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 Mitsubishi Gas Chemical, you can compare the effects of market volatilities on Shin Etsu and Mitsubishi Gas 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 Mitsubishi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Mitsubishi Gas.
Diversification Opportunities for Shin Etsu and Mitsubishi Gas
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shin and Mitsubishi is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Mitsubishi Gas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Gas Chemical 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 Mitsubishi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Gas Chemical has no effect on the direction of Shin Etsu i.e., Shin Etsu and Mitsubishi Gas go up and down completely randomly.
Pair Corralation between Shin Etsu and Mitsubishi Gas
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Mitsubishi Gas. In addition to that, Shin Etsu is 1.2 times more volatile than Mitsubishi Gas Chemical. It trades about -0.04 of its total potential returns per unit of risk. Mitsubishi Gas Chemical is currently generating about 0.04 per unit of volatility. If you would invest 1,650 in Mitsubishi Gas Chemical on September 12, 2024 and sell it today you would earn a total of 20.00 from holding Mitsubishi Gas Chemical or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Mitsubishi Gas Chemical
Performance |
| Timeline |
| Shin Etsu Chemical |
| Mitsubishi Gas Chemical |
Shin Etsu and Mitsubishi Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Mitsubishi Gas
The main advantage of trading using opposite Shin Etsu and Mitsubishi Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Mitsubishi Gas 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 Mitsubishi Gas will offset losses from the drop in Mitsubishi Gas' 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 |
| Mitsubishi Gas vs. Ribbon Communications | Mitsubishi Gas vs. Zoom Video Communications | Mitsubishi Gas vs. SK TELECOM TDADR | Mitsubishi Gas vs. Cogent Communications Holdings |
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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