Correlation Between SHIN-ETSU CHEMICAL and Japan Asia
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and Japan Asia 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 Asia 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 Asia Investment, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Japan Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Japan Asia.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Japan Asia
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SHIN-ETSU and Japan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment 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 Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Japan Asia go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Japan Asia
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the Japan Asia. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 1.21 times less risky than Japan Asia. The stock trades about -0.22 of its potential returns per unit of risk. The Japan Asia Investment is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 128.00 in Japan Asia Investment on October 13, 2024 and sell it today you would lose (3.00) from holding Japan Asia Investment or give up 2.34% of portfolio value 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 Asia Investment
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Japan Asia Investment |
SHIN-ETSU CHEMICAL and Japan Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Japan Asia
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, Japan Asia 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 Asia will offset losses from the drop in Japan Asia's long position.| SHIN-ETSU CHEMICAL vs. Garofalo Health Care | SHIN-ETSU CHEMICAL vs. Air Lease | SHIN-ETSU CHEMICAL vs. UNIDOC HEALTH P | SHIN-ETSU CHEMICAL vs. YOOMA WELLNESS INC |
| Japan Asia vs. Ameriprise Financial | Japan Asia vs. PNC Financial Services | Japan Asia vs. COSMOSTEEL HLDGS | Japan Asia vs. ANGANG STEEL H |
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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