Correlation Between SHIN-ETSU CHEMICAL and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and Quaker 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 CHEMICAL and Quaker 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 Quaker Chemical, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Quaker 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 CHEMICAL with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Quaker Chemical.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Quaker Chemical
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between SHIN-ETSU and Quaker is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Quaker Chemical go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Quaker Chemical
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 1.16 times more return on investment than Quaker Chemical. However, SHIN-ETSU CHEMICAL is 1.16 times more volatile than Quaker Chemical. It trades about 0.03 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.01 per unit of risk. If you would invest 3,040 in SHIN ETSU CHEMICAL on August 28, 2024 and sell it today you would earn a total of 458.00 from holding SHIN ETSU CHEMICAL or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Quaker Chemical
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Quaker Chemical |
SHIN-ETSU CHEMICAL and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Quaker Chemical
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, Quaker 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 Quaker Chemical will offset losses from the drop in Quaker Chemical'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 |
| Quaker Chemical vs. Albemarle | Quaker Chemical vs. Superior Plus Corp | Quaker Chemical vs. NMI Holdings | Quaker Chemical vs. Origin Agritech |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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