Correlation Between SEALED AIR and SHIN ETSU

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

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

Diversification Opportunities for SEALED AIR and SHIN ETSU

-0.31

Correlation Coefficient

SEALED AIR  SHIN ETSU

Very good diversification

The 3 months correlation between SEALED and SHIN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR 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 SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and SHIN ETSU go up and down completely randomly.

Pair Corralation between SEALED AIR and SHIN ETSU

Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the SHIN ETSU. In addition to that, SEALED AIR is 1.09 times more volatile than SHIN ETSU CHEMICAL . It trades about -0.03 of its total potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.04 per unit of volatility. If you would invest  2,374  in SHIN ETSU CHEMICAL on October 10, 2024 and sell it today you would earn a total of  794.00  from holding SHIN ETSU CHEMICAL or generate 33.45% return on investment over 90 days.

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

SEALED AIR   vs.  SHIN ETSU CHEMICAL

SEALED AIR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SEALED AIR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SEALED AIR and SHIN ETSU

The main advantage of trading using opposite SEALED AIR and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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 SEALED AIR 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.