Correlation Between Sanyo Chemical and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical 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 Sanyo Chemical and Shin Etsu 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 Co, you can compare the effects of market volatilities on Sanyo Chemical 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 Sanyo Chemical with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and Shin Etsu.
Diversification Opportunities for Sanyo Chemical and Shin Etsu
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sanyo and Shin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and Shin Etsu Chemical Co 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. 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 go up and down completely randomly.
Pair Corralation between Sanyo Chemical and Shin Etsu
Assuming the 90 days horizon Sanyo Chemical Industries is expected to generate 0.65 times more return on investment than Shin Etsu. However, Sanyo Chemical Industries is 1.55 times less risky than Shin Etsu. It trades about 0.13 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 2,440 in Sanyo Chemical Industries on September 12, 2024 and sell it today you would earn a total of 80.00 from holding Sanyo Chemical Industries or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Sanyo Chemical Industries |
| Shin Etsu Chemical |
Sanyo Chemical and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and Shin Etsu
The main advantage of trading using opposite Sanyo Chemical and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical 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.| Sanyo Chemical vs. Lifeway Foods | Sanyo Chemical vs. Iridium Communications | Sanyo Chemical vs. NISSIN FOODS HLDGS | Sanyo Chemical vs. Moneysupermarket Group PLC |
| Shin Etsu vs. AIR LIQUIDE ADR | Shin Etsu vs. Ganfeng Lithium Co | Shin Etsu vs. Superior Plus Corp | Shin Etsu vs. SIVERS SEMICONDUCTORS AB |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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