Correlation Between CHEMICAL INDUSTRIES and SHIN ETSU
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES and SHIN ETSU 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 CHEMICAL INDUSTRIES and SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES and SHIN ETSU 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 CHEMICAL INDUSTRIES with a short position of SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and SHIN ETSU.
Diversification Opportunities for CHEMICAL INDUSTRIES and SHIN ETSU
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and SHIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES are associated (or correlated) with SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and SHIN ETSU go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and SHIN ETSU
Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 5.75 times less return on investment than SHIN ETSU. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 8.81 times less risky than SHIN ETSU. It trades about 0.06 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,278 in SHIN ETSU CHEMICAL on September 24, 2024 and sell it today you would earn a total of 827.00 from holding SHIN ETSU CHEMICAL or generate 36.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.61% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| SHIN ETSU CHEMICAL |
CHEMICAL INDUSTRIES and SHIN ETSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and SHIN ETSU
The main advantage of trading using opposite CHEMICAL INDUSTRIES and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES position performs unexpectedly, SHIN ETSU 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 SHIN ETSU will offset losses from the drop in SHIN ETSU's long position.| CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Microsoft |
| SHIN ETSU vs. Lendlease Group | SHIN ETSU vs. LION ONE METALS | SHIN ETSU vs. United Rentals | SHIN ETSU vs. TELES Informationstechnologien AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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