Correlation Between SHIN ETSU and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on SHIN ETSU and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and KINGBOARD CHEMICAL.
Diversification Opportunities for SHIN ETSU and KINGBOARD CHEMICAL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIN and KINGBOARD is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD 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 are associated (or correlated) with KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of SHIN ETSU i.e., SHIN ETSU and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between SHIN ETSU and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the KINGBOARD CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 2.87 times less risky than KINGBOARD CHEMICAL. The stock trades about -0.22 of its potential returns per unit of risk. The KINGBOARD CHEMICAL is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 188.00 in KINGBOARD CHEMICAL on September 19, 2024 and sell it today you would earn a total of 36.00 from holding KINGBOARD CHEMICAL or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| KINGBOARD CHEMICAL |
SHIN ETSU and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and KINGBOARD CHEMICAL
The main advantage of trading using opposite SHIN ETSU and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.The idea behind SHIN ETSU CHEMICAL and KINGBOARD CHEMICAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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