Correlation Between Shin-Etsu Chemical and Haydale Graphene
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Haydale 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 Haydale 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 Haydale Graphene Industries, you can compare the effects of market volatilities on Shin-Etsu Chemical and Haydale 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 Haydale Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Haydale Graphene.
Diversification Opportunities for Shin-Etsu Chemical and Haydale Graphene
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin-Etsu and Haydale is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Haydale Graphene Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haydale Graphene Ind 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 Haydale Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haydale Graphene Ind has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Haydale Graphene go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Haydale Graphene
Assuming the 90 days horizon Shin-Etsu Chemical is expected to generate 12.58 times less return on investment than Haydale Graphene. But when comparing it to its historical volatility, Shin Etsu Chemical Co is 5.42 times less risky than Haydale Graphene. It trades about 0.03 of its potential returns per unit of risk. Haydale Graphene Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.62 in Haydale Graphene Industries on September 4, 2024 and sell it today you would lose (0.36) from holding Haydale Graphene Industries or give up 58.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Haydale Graphene Industries
Performance |
| Timeline |
| Shin Etsu Chemical |
| Haydale Graphene Ind |
Shin-Etsu Chemical and Haydale Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Haydale Graphene
The main advantage of trading using opposite Shin-Etsu Chemical and Haydale Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Haydale 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 Haydale Graphene will offset losses from the drop in Haydale Graphene's long position.| Shin-Etsu Chemical vs. Haydale Graphene Industries | Shin-Etsu Chemical vs. Versarien plc | Shin-Etsu Chemical vs. G6 Materials Corp |
| Haydale Graphene vs. Versarien plc | Haydale Graphene vs. Graphene Manufacturing Group | Haydale Graphene vs. Olin Corporation | Haydale 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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