Correlation Between Shin-Etsu Chemical and Asahi Kaisei
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Asahi Kaisei 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 Asahi Kaisei 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 Asahi Kaisei Corp, you can compare the effects of market volatilities on Shin-Etsu Chemical and Asahi Kaisei 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 Asahi Kaisei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Asahi Kaisei.
Diversification Opportunities for Shin-Etsu Chemical and Asahi Kaisei
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shin-Etsu and Asahi is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Asahi Kaisei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Kaisei Corp 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 Asahi Kaisei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Kaisei Corp has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Asahi Kaisei go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Asahi Kaisei
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Asahi Kaisei. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 1.41 times less risky than Asahi Kaisei. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Asahi Kaisei Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,383 in Asahi Kaisei Corp on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Asahi Kaisei Corp or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Asahi Kaisei Corp
Performance |
| Timeline |
| Shin Etsu Chemical |
| Asahi Kaisei Corp |
Shin-Etsu Chemical and Asahi Kaisei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Asahi Kaisei
The main advantage of trading using opposite Shin-Etsu Chemical and Asahi Kaisei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Asahi Kaisei 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 Asahi Kaisei will offset losses from the drop in Asahi Kaisei's long position.| Shin-Etsu Chemical vs. BASF SE NA | Shin-Etsu Chemical vs. Braskem SA Class | Shin-Etsu Chemical vs. Lsb Industries | Shin-Etsu Chemical vs. Dow Inc |
| Asahi Kaisei vs. BASF SE NA | Asahi Kaisei vs. Braskem SA Class | Asahi Kaisei vs. Lsb Industries | Asahi Kaisei 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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