Correlation Between SHIN-ETSU CHEMICAL and Japan Post
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and Japan Post 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 Japan Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Japan Post Insurance, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Japan Post 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 Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Japan Post.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Japan Post
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SHIN-ETSU and Japan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance 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 are associated (or correlated) with Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Japan Post go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Japan Post
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the Japan Post. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 1.33 times less risky than Japan Post. The stock trades about -0.02 of its potential returns per unit of risk. The Japan Post Insurance is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 1,490 in Japan Post Insurance on August 26, 2024 and sell it today you would earn a total of 370.00 from holding Japan Post Insurance or generate 24.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Japan Post Insurance
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Japan Post Insurance |
SHIN-ETSU CHEMICAL and Japan Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Japan Post
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, Japan Post 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 Japan Post will offset losses from the drop in Japan Post's long position.| SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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