Correlation Between GREENX METALS and Shin Etsu

Can any of the company-specific risk be diversified away by investing in both GREENX METALS 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 GREENX METALS and Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GREENX METALS LTD and Shin Etsu Chemical Co, you can compare the effects of market volatilities on GREENX METALS 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 GREENX METALS with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENX METALS and Shin Etsu.

Diversification Opportunities for GREENX METALS and Shin Etsu

0.34

Correlation Coefficient

GREENX METALS  Shin Etsu

Weak diversification

The 3 months correlation between GREENX and Shin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding GREENX METALS LTD 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 GREENX METALS 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 GREENX METALS LTD 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 GREENX METALS i.e., GREENX METALS and Shin Etsu go up and down completely randomly.

Pair Corralation between GREENX METALS and Shin Etsu

Assuming the 90 days trading horizon GREENX METALS LTD is expected to under-perform the Shin Etsu. In addition to that, GREENX METALS is 1.91 times more volatile than Shin Etsu Chemical Co. It trades about 0.0 of its total potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about 0.02 per unit of volatility. If you would invest  2,900  in Shin Etsu Chemical Co on October 4, 2024 and sell it today you would earn a total of  269.00  from holding Shin Etsu Chemical Co or generate 9.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GREENX METALS LTD  vs.  Shin Etsu Chemical Co

GREENX METALS LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GREENX METALS LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GREENX METALS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shin Etsu Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Etsu Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GREENX METALS and Shin Etsu

The main advantage of trading using opposite GREENX METALS and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENX METALS 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.

The idea behind GREENX METALS LTD and Shin Etsu Chemical Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.