Correlation Between Armada Hflr and SHIN ETSU

Can any of the company-specific risk be diversified away by investing in both Armada Hflr 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 Armada Hflr and SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on Armada Hflr 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 Armada Hflr with a short position of SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and SHIN ETSU.

Diversification Opportunities for Armada Hflr and SHIN ETSU

0.18

Correlation Coefficient

Armada Hflr  SHIN ETSU

Average diversification

The 3 months correlation between Armada and SHIN is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr 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 Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and SHIN ETSU go up and down completely randomly.

Pair Corralation between Armada Hflr and SHIN ETSU

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the SHIN ETSU. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.25 times less risky than SHIN ETSU. The stock trades about -0.08 of its potential returns per unit of risk. The SHIN ETSU CHEMICAL is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,578  in SHIN ETSU CHEMICAL on September 17, 2024 and sell it today you would lose (278.00) from holding SHIN ETSU CHEMICAL or give up 7.77% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  SHIN ETSU CHEMICAL

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIN ETSU CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Armada Hflr and SHIN ETSU

The main advantage of trading using opposite Armada Hflr and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr and SHIN ETSU CHEMICAL 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.