Correlation Between Shin-Etsu Chemical and Ganfeng Lithium
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Ganfeng Lithium 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 Ganfeng Lithium 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 Ganfeng Lithium Co, you can compare the effects of market volatilities on Shin-Etsu Chemical and Ganfeng Lithium 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 Ganfeng Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Ganfeng Lithium.
Diversification Opportunities for Shin-Etsu Chemical and Ganfeng Lithium
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shin-Etsu and Ganfeng is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Ganfeng Lithium go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Ganfeng Lithium
Assuming the 90 days horizon Shin-Etsu Chemical is expected to generate 55.85 times less return on investment than Ganfeng Lithium. But when comparing it to its historical volatility, Shin Etsu Chemical Co is 2.2 times less risky than Ganfeng Lithium. It trades about 0.0 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 147.00 in Ganfeng Lithium Co on September 1, 2024 and sell it today you would earn a total of 168.00 from holding Ganfeng Lithium Co or generate 114.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Ganfeng Lithium Co
Performance |
| Timeline |
| Shin Etsu Chemical |
| Ganfeng Lithium |
Shin-Etsu Chemical and Ganfeng Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Ganfeng Lithium
The main advantage of trading using opposite Shin-Etsu Chemical and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Ganfeng Lithium 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 Ganfeng Lithium will offset losses from the drop in Ganfeng Lithium'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 |
| Ganfeng Lithium vs. BASF SE NA | Ganfeng Lithium vs. Braskem SA Class | Ganfeng Lithium vs. Lsb Industries | Ganfeng Lithium vs. Dow 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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