Correlation Between SHIN-ETSU CHEMICAL and JD

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

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

Diversification Opportunities for SHIN-ETSU CHEMICAL and JD

0.51

Correlation Coefficient

SHIN-ETSU CHEMICAL  JD

Very weak diversification

The 3 months correlation between SHIN-ETSU and JD is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and SHIN-ETSU 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 SHIN ETSU CHEMICAL are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and JD go up and down completely randomly.

Pair Corralation between SHIN-ETSU CHEMICAL and JD

Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the JD. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 1.86 times less risky than JD. The stock trades about -0.04 of its potential returns per unit of risk. The JD Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,059  in JD Inc on October 22, 2024 and sell it today you would earn a total of  905.00  from holding JD Inc or generate 85.46% return on investment over 90 days.

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

SHIN ETSU CHEMICAL   vs.  JD Inc

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 technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JD Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SHIN-ETSU CHEMICAL and JD

The main advantage of trading using opposite SHIN-ETSU CHEMICAL and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.

The idea behind SHIN ETSU CHEMICAL and JD Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.