Correlation Between Shin Etsu and Valhi
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Valhi 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 Valhi 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 Valhi Inc, you can compare the effects of market volatilities on Shin Etsu and Valhi 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 Valhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Valhi.
Diversification Opportunities for Shin Etsu and Valhi
Good diversification
The 3 months correlation between Shin and Valhi is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi Inc 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 Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of Shin Etsu i.e., Shin Etsu and Valhi go up and down completely randomly.
Pair Corralation between Shin Etsu and Valhi
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.77 times more return on investment than Valhi. However, Shin Etsu Chemical Co is 1.3 times less risky than Valhi. It trades about 0.04 of its potential returns per unit of risk. Valhi Inc is currently generating about 0.02 per unit of risk. If you would invest 2,378 in Shin Etsu Chemical Co on August 24, 2024 and sell it today you would earn a total of 1,189 from holding Shin Etsu Chemical Co or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Valhi Inc
Performance |
| Timeline |
| Shin Etsu Chemical |
| Valhi Inc |
Shin Etsu and Valhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Valhi
The main advantage of trading using opposite Shin Etsu and Valhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Valhi 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 Valhi will offset losses from the drop in Valhi's long position.| Shin Etsu vs. Origin Materials | Shin Etsu vs. BASF SE NA | Shin Etsu vs. Braskem SA Class | Shin Etsu vs. Lsb Industries |
| Valhi vs. Huntsman | Valhi vs. Lsb Industries | Valhi vs. Westlake Chemical Partners | Valhi vs. Green Plains Renewable |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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