Correlation Between Shin-Etsu Chemical and E I
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and E I 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 E I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Etsu Chemical Co and E I du, you can compare the effects of market volatilities on Shin-Etsu Chemical and E I 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 E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and E I.
Diversification Opportunities for Shin-Etsu Chemical and E I
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin-Etsu and CTA-PB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du 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 Co are associated (or correlated) with E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and E I go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and E I
Assuming the 90 days horizon Shin-Etsu Chemical is expected to generate 2.52 times less return on investment than E I. In addition to that, Shin-Etsu Chemical is 3.84 times more volatile than E I du. It trades about 0.0 of its total potential returns per unit of risk. E I du is currently generating about 0.04 per unit of volatility. If you would invest 6,984 in E I du on September 1, 2024 and sell it today you would earn a total of 313.00 from holding E I du or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. E I du
Performance |
| Timeline |
| Shin Etsu Chemical |
| E I du |
Shin-Etsu Chemical and E I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and E I
The main advantage of trading using opposite Shin-Etsu Chemical and E I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, E I 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 E I will offset losses from the drop in E I's long position.| Shin-Etsu Chemical vs. Kuraray Co | Shin-Etsu Chemical vs. Mitsubishi Chemical Holdings | Shin-Etsu Chemical vs. Sumitomo Chemical Co | Shin-Etsu Chemical vs. Valhi 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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