Correlation Between Shin Etsu and Altech Batteries
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Altech Batteries 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 Altech Batteries 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 Altech Batteries Limited, you can compare the effects of market volatilities on Shin Etsu and Altech Batteries 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 Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Altech Batteries.
Diversification Opportunities for Shin Etsu and Altech Batteries
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shin and Altech is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries 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 Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Shin Etsu i.e., Shin Etsu and Altech Batteries go up and down completely randomly.
Pair Corralation between Shin Etsu and Altech Batteries
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.21 times more return on investment than Altech Batteries. However, Shin Etsu Chemical Co is 4.85 times less risky than Altech Batteries. It trades about 0.03 of its potential returns per unit of risk. Altech Batteries Limited is currently generating about -0.06 per unit of risk. If you would invest 1,821 in Shin Etsu Chemical Co on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Shin Etsu Chemical Co or generate 0.55% 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. Altech Batteries Limited
Performance |
| Timeline |
| Shin Etsu Chemical |
| Altech Batteries |
Shin Etsu and Altech Batteries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Altech Batteries
The main advantage of trading using opposite Shin Etsu and Altech Batteries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Altech Batteries 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 Altech Batteries will offset losses from the drop in Altech Batteries' long position.| Shin Etsu vs. BASF SE NA | Shin Etsu vs. BASF SE ADR | Shin Etsu vs. Braskem SA Class | Shin Etsu vs. Celanese |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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