Correlation Between SHIN-ETSU CHEMICAL and Caseys General
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and Caseys General 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 Caseys General 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 Caseys General Stores, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Caseys General.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Caseys General
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SHIN-ETSU and Caseys is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Caseys General go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Caseys General
Assuming the 90 days trading horizon SHIN-ETSU CHEMICAL is expected to generate 2.57 times less return on investment than Caseys General. But when comparing it to its historical volatility, SHIN ETSU CHEMICAL is 1.2 times less risky than Caseys General. It trades about 0.1 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 36,949 in Caseys General Stores on August 29, 2024 and sell it today you would earn a total of 3,651 from holding Caseys General Stores or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Caseys General Stores
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Caseys General Stores |
SHIN-ETSU CHEMICAL and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Caseys General
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General'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 |
| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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