Correlation Between Shin-Etsu Chemical and Green Plains
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Green Plains 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 Green Plains 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 Green Plains Renewable, you can compare the effects of market volatilities on Shin-Etsu Chemical and Green Plains 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 Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Green Plains.
Diversification Opportunities for Shin-Etsu Chemical and Green Plains
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shin-Etsu and Green is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Green Plains Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Plains Renewable 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 Green Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Plains Renewable has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Green Plains go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Green Plains
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.39 times more return on investment than Green Plains. However, Shin Etsu Chemical Co is 2.58 times less risky than Green Plains. It trades about -0.05 of its potential returns per unit of risk. Green Plains Renewable is currently generating about -0.15 per unit of risk. If you would invest 1,842 in Shin Etsu Chemical Co on September 1, 2024 and sell it today you would lose (28.00) from holding Shin Etsu Chemical Co or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Green Plains Renewable
Performance |
| Timeline |
| Shin Etsu Chemical |
| Green Plains Renewable |
Shin-Etsu Chemical and Green Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Green Plains
The main advantage of trading using opposite Shin-Etsu Chemical and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Green Plains 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 Green Plains will offset losses from the drop in Green Plains' 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 |
| Green Plains vs. Lsb Industries | Green Plains vs. AdvanSix | Green Plains vs. Tronox Holdings PLC | Green Plains vs. Methanex |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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