Correlation Between SHIN-ETSU CHEMICAL and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and China BlueChemical.
Diversification Opportunities for SHIN-ETSU CHEMICAL and China BlueChemical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIN-ETSU and China is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and China BlueChemical go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and China BlueChemical
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 0.56 times more return on investment than China BlueChemical. However, SHIN ETSU CHEMICAL is 1.78 times less risky than China BlueChemical. It trades about 0.05 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.02 per unit of risk. If you would invest 2,377 in SHIN ETSU CHEMICAL on August 28, 2024 and sell it today you would earn a total of 1,101 from holding SHIN ETSU CHEMICAL or generate 46.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. China BlueChemical
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| China BlueChemical |
SHIN-ETSU CHEMICAL and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and China BlueChemical
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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