Correlation Between SHIN ETSU and SEKISUI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU and SEKISUI 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 SEKISUI 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 SEKISUI CHEMICAL, you can compare the effects of market volatilities on SHIN ETSU and SEKISUI 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 SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and SEKISUI CHEMICAL.
Diversification Opportunities for SHIN ETSU and SEKISUI CHEMICAL
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIN and SEKISUI is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI 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 SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of SHIN ETSU i.e., SHIN ETSU and SEKISUI CHEMICAL go up and down completely randomly.
Pair Corralation between SHIN ETSU and SEKISUI CHEMICAL
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 1.54 times more return on investment than SEKISUI CHEMICAL. However, SHIN ETSU is 1.54 times more volatile than SEKISUI CHEMICAL. It trades about 0.04 of its potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.02 per unit of risk. If you would invest 2,278 in SHIN ETSU CHEMICAL on September 24, 2024 and sell it today you would earn a total of 827.00 from holding SHIN ETSU CHEMICAL or generate 36.3% 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. SEKISUI CHEMICAL
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| SEKISUI CHEMICAL |
SHIN ETSU and SEKISUI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and SEKISUI CHEMICAL
The main advantage of trading using opposite SHIN ETSU and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU position performs unexpectedly, SEKISUI 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 SEKISUI CHEMICAL will offset losses from the drop in SEKISUI CHEMICAL's long position.| SHIN ETSU vs. Lendlease Group | SHIN ETSU vs. LION ONE METALS | SHIN ETSU vs. United Rentals | SHIN ETSU vs. TELES Informationstechnologien AG |
| SEKISUI CHEMICAL vs. Scientific Games | SEKISUI CHEMICAL vs. PT Ace Hardware | SEKISUI CHEMICAL vs. GAMING FAC SA | SEKISUI CHEMICAL vs. SMA Solar Technology |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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