Correlation Between Shin-Etsu Chemical and First Graphene
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and First Graphene 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 First Graphene 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 First Graphene, you can compare the effects of market volatilities on Shin-Etsu Chemical and First Graphene 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 First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and First Graphene.
Diversification Opportunities for Shin-Etsu Chemical and First Graphene
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin-Etsu and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene 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 First Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Graphene has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and First Graphene go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and First Graphene
Assuming the 90 days horizon Shin-Etsu Chemical is expected to generate 6.48 times less return on investment than First Graphene. But when comparing it to its historical volatility, Shin Etsu Chemical Co is 2.85 times less risky than First Graphene. It trades about 0.0 of its potential returns per unit of risk. First Graphene is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3.80 in First Graphene on September 1, 2024 and sell it today you would lose (1.70) from holding First Graphene or give up 44.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. First Graphene
Performance |
| Timeline |
| Shin Etsu Chemical |
| First Graphene |
Shin-Etsu Chemical and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and First Graphene
The main advantage of trading using opposite Shin-Etsu Chemical and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, First Graphene 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 First Graphene will offset losses from the drop in First Graphene'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 |
| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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