Correlation Between SHIN ETSU and New Work
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU and New Work 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 New Work 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 New Work SE, you can compare the effects of market volatilities on SHIN ETSU and New Work 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 New Work. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and New Work.
Diversification Opportunities for SHIN ETSU and New Work
Excellent diversification
The 3 months correlation between SHIN and New is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and New Work SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Work SE 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 New Work. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Work SE has no effect on the direction of SHIN ETSU i.e., SHIN ETSU and New Work go up and down completely randomly.
Pair Corralation between SHIN ETSU and New Work
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 0.88 times more return on investment than New Work. However, SHIN ETSU CHEMICAL is 1.13 times less risky than New Work. It trades about 0.04 of its potential returns per unit of risk. New Work SE is currently generating about 0.02 per unit of risk. If you would invest 2,700 in SHIN ETSU CHEMICAL on September 19, 2024 and sell it today you would earn a total of 483.00 from holding SHIN ETSU CHEMICAL or generate 17.89% 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. New Work SE
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| New Work SE |
SHIN ETSU and New Work Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and New Work
The main advantage of trading using opposite SHIN ETSU and New Work positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU position performs unexpectedly, New Work 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 New Work will offset losses from the drop in New Work's long position.The idea behind SHIN ETSU CHEMICAL and New Work SE 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.| New Work vs. CarsalesCom | New Work vs. ALERION CLEANPOWER | New Work vs. CVW CLEANTECH INC | New Work vs. CANON MARKETING JP |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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