Correlation Between Shin Etsu and GVS SPA
Can any of the company-specific risk be diversified away by investing in both Shin Etsu and GVS SPA 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 and GVS SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Etsu Chemical Co and GVS SPA, you can compare the effects of market volatilities on Shin Etsu and GVS SPA 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 with a short position of GVS SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and GVS SPA.
Diversification Opportunities for Shin Etsu and GVS SPA
Poor diversification
The 3 months correlation between Shin and GVS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and GVS SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GVS SPA and Shin Etsu 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 Co are associated (or correlated) with GVS SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GVS SPA has no effect on the direction of Shin Etsu i.e., Shin Etsu and GVS SPA go up and down completely randomly.
Pair Corralation between Shin Etsu and GVS SPA
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.54 times more return on investment than GVS SPA. However, Shin Etsu Chemical Co is 1.84 times less risky than GVS SPA. It trades about -0.04 of its potential returns per unit of risk. GVS SPA is currently generating about -0.1 per unit of risk. If you would invest 3,386 in Shin Etsu Chemical Co on September 15, 2024 and sell it today you would lose (55.00) from holding Shin Etsu Chemical Co or give up 1.62% 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 Co vs. GVS SPA
Performance |
Timeline |
Shin Etsu Chemical |
GVS SPA |
Shin Etsu and GVS SPA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin Etsu and GVS SPA
The main advantage of trading using opposite Shin Etsu and GVS SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, GVS SPA 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 GVS SPA will offset losses from the drop in GVS SPA's long position.Shin Etsu vs. AIR LIQUIDE ADR | Shin Etsu vs. Ganfeng Lithium Co | Shin Etsu vs. Superior Plus Corp | Shin Etsu vs. SIVERS SEMICONDUCTORS AB |
GVS SPA vs. AIR PRODCHEMICALS | GVS SPA vs. INDO RAMA SYNTHETIC | GVS SPA vs. KINGBOARD CHEMICAL | GVS SPA vs. Shin Etsu Chemical Co |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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