Correlation Between Sanyo Chemical and SHIN-ETSU CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and SHIN-ETSU CHEMICAL 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 Sanyo Chemical and SHIN-ETSU CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyo Chemical Industries and SHIN ETSU CHEMICAL , you can compare the effects of market volatilities on Sanyo Chemical and SHIN-ETSU CHEMICAL 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 Sanyo Chemical with a short position of SHIN-ETSU CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and SHIN-ETSU CHEMICAL.
Diversification Opportunities for Sanyo Chemical and SHIN-ETSU CHEMICAL
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanyo and SHIN-ETSU is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo 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 Sanyo 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 Sanyo Chemical Industries are associated (or correlated) with SHIN-ETSU CHEMICAL. 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 Sanyo Chemical i.e., Sanyo Chemical and SHIN-ETSU CHEMICAL go up and down completely randomly.
Pair Corralation between Sanyo Chemical and SHIN-ETSU CHEMICAL
Assuming the 90 days horizon Sanyo Chemical is expected to generate 53.84 times less return on investment than SHIN-ETSU CHEMICAL. But when comparing it to its historical volatility, Sanyo Chemical Industries is 1.59 times less risky than SHIN-ETSU CHEMICAL. It trades about 0.0 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,356 in SHIN ETSU CHEMICAL on September 2, 2024 and sell it today you would earn a total of 143.00 from holding SHIN ETSU CHEMICAL or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| Sanyo Chemical Industries |
| SHIN ETSU CHEMICAL |
Sanyo Chemical and SHIN-ETSU CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and SHIN-ETSU CHEMICAL
The main advantage of trading using opposite Sanyo Chemical and SHIN-ETSU CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, SHIN-ETSU CHEMICAL 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 CHEMICAL will offset losses from the drop in SHIN-ETSU CHEMICAL's long position.| Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. SIKA AG UNSPADR | Sanyo Chemical vs. LyondellBasell Industries NV | Sanyo Chemical vs. Albemarle |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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