Correlation Between Shin Etsu and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Origin Materials 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 Origin Materials 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 Origin Materials, you can compare the effects of market volatilities on Shin Etsu and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Origin Materials.
Diversification Opportunities for Shin Etsu and Origin Materials
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin and Origin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Co are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Shin Etsu i.e., Shin Etsu and Origin Materials go up and down completely randomly.
Pair Corralation between Shin Etsu and Origin Materials
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Origin Materials. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 1.11 times less risky than Origin Materials. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Origin Materials is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Origin Materials on August 28, 2024 and sell it today you would lose (9.00) from holding Origin Materials or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Origin Materials
Performance |
| Timeline |
| Shin Etsu Chemical |
| Origin Materials |
Shin Etsu and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Origin Materials
The main advantage of trading using opposite Shin Etsu and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| Shin Etsu vs. Kuraray Co | Shin Etsu vs. Mitsubishi Chemical Holdings | Shin Etsu vs. Sumitomo Chemical Co | Shin Etsu vs. Valhi Inc |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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