Correlation Between Shin-Etsu Chemical and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Origin Materials 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 Origin Materials 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 Origin Materials, you can compare the effects of market volatilities on Shin-Etsu Chemical and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Origin Materials.
Diversification Opportunities for Shin-Etsu Chemical and Origin Materials
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin-Etsu and Origin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Origin Materials go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Origin Materials
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.26 times more return on investment than Origin Materials. However, Shin Etsu Chemical Co is 3.85 times less risky than Origin Materials. It trades about 0.03 of its potential returns per unit of risk. Origin Materials is currently generating about -0.01 per unit of risk. If you would invest 1,602 in Shin Etsu Chemical Co on August 31, 2024 and sell it today you would earn a total of 212.00 from holding Shin Etsu Chemical Co or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Origin Materials
Performance |
| Timeline |
| Shin Etsu Chemical |
| Origin Materials |
Shin-Etsu Chemical and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Origin Materials
The main advantage of trading using opposite Shin-Etsu Chemical and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| Shin-Etsu Chemical vs. BASF SE NA | Shin-Etsu Chemical vs. BASF SE ADR | Shin-Etsu Chemical vs. Braskem SA Class | Shin-Etsu Chemical vs. Celanese |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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