Correlation Between NanoXplore and Shin-Etsu Chemical

Can any of the company-specific risk be diversified away by investing in both NanoXplore 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 NanoXplore 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 NanoXplore and Shin Etsu Chemical Co, you can compare the effects of market volatilities on NanoXplore 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 NanoXplore with a short position of Shin-Etsu Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NanoXplore and Shin-Etsu Chemical.

Diversification Opportunities for NanoXplore and Shin-Etsu Chemical

0.18

Correlation Coefficient

NanoXplore  Shin-Etsu Chemical

Average diversification

The 3 months correlation between NanoXplore and Shin-Etsu is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NanoXplore 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 NanoXplore 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 NanoXplore 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 NanoXplore i.e., NanoXplore and Shin-Etsu Chemical go up and down completely randomly.

Pair Corralation between NanoXplore and Shin-Etsu Chemical

Assuming the 90 days horizon NanoXplore is expected to generate 0.61 times more return on investment than Shin-Etsu Chemical. However, NanoXplore is 1.64 times less risky than Shin-Etsu Chemical. It trades about 0.0 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  164.00  in NanoXplore on August 31, 2024 and sell it today you would lose (3.00) from holding NanoXplore or give up 1.83% of portfolio value over 90 days.

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

NanoXplore  vs.  Shin Etsu Chemical Co

NanoXplore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NanoXplore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NanoXplore is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 nearly stable fundamental indicators, Shin-Etsu Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NanoXplore and Shin-Etsu Chemical

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

The idea behind NanoXplore 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.