Correlation Between SHIN-ETSU CHEMICAL and Hyster-Yale Materials

Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and Hyster-Yale Materials 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 Hyster-Yale Materials 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 Hyster Yale Materials Handling, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Hyster-Yale Materials 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 Hyster-Yale Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Hyster-Yale Materials.

Diversification Opportunities for SHIN-ETSU CHEMICAL and Hyster-Yale Materials

0.68

Correlation Coefficient

SHIN-ETSU CHEMICAL  Hyster-Yale Materials

Poor diversification

The 3 months correlation between SHIN-ETSU and Hyster-Yale is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials 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 Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Hyster-Yale Materials go up and down completely randomly.

Pair Corralation between SHIN-ETSU CHEMICAL and Hyster-Yale Materials

Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the Hyster-Yale Materials. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 1.39 times less risky than Hyster-Yale Materials. The stock trades about -0.14 of its potential returns per unit of risk. The Hyster Yale Materials Handling is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,710  in Hyster Yale Materials Handling on December 28, 2024 and sell it today you would lose (610.00) from holding Hyster Yale Materials Handling or give up 12.95% of portfolio value over 90 days.

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

SHIN ETSU CHEMICAL   vs.  Hyster Yale Materials Handling

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

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

Hyster Yale Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SHIN-ETSU CHEMICAL and Hyster-Yale Materials

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

The idea behind SHIN ETSU CHEMICAL and Hyster Yale Materials Handling 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.