Correlation Between Shin Etsu and Methanex
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Methanex 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 Methanex 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 Methanex, you can compare the effects of market volatilities on Shin Etsu and Methanex 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 Methanex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Methanex.
Diversification Opportunities for Shin Etsu and Methanex
Weak diversification
The 3 months correlation between Shin and Methanex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Methanex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanex 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 Methanex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanex has no effect on the direction of Shin Etsu i.e., Shin Etsu and Methanex go up and down completely randomly.
Pair Corralation between Shin Etsu and Methanex
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.81 times more return on investment than Methanex. However, Shin Etsu Chemical Co is 1.23 times less risky than Methanex. It trades about 0.05 of its potential returns per unit of risk. Methanex is currently generating about 0.03 per unit of risk. If you would invest 1,275 in Shin Etsu Chemical Co on August 24, 2024 and sell it today you would earn a total of 540.00 from holding Shin Etsu Chemical Co or generate 42.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Methanex
Performance |
| Timeline |
| Shin Etsu Chemical |
| Methanex |
Shin Etsu and Methanex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Methanex
The main advantage of trading using opposite Shin Etsu and Methanex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Methanex 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 Methanex will offset losses from the drop in Methanex's long position.| Shin Etsu vs. BASF SE NA | Shin Etsu vs. BASF SE ADR | Shin Etsu vs. Braskem SA Class | Shin Etsu vs. Celanese |
| Methanex vs. AdvanSix | Methanex vs. Lsb Industries | Methanex vs. Green Plains Renewable | Methanex vs. Tronox Holdings PLC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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