Correlation Between Shin-Etsu Chemical and BRUNELLO C

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

Diversification Opportunities for Shin-Etsu Chemical and BRUNELLO C

-0.78

Correlation Coefficient

Shin-Etsu Chemical  BRUNELLO C

Pay attention - limited upside

The 3 months correlation between Shin-Etsu and BRUNELLO is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and BRUNELLO C SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRUNELLO C SPA 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 Co are associated (or correlated) with BRUNELLO C. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRUNELLO C SPA has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and BRUNELLO C go up and down completely randomly.

Pair Corralation between Shin-Etsu Chemical and BRUNELLO C

Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the BRUNELLO C. In addition to that, Shin-Etsu Chemical is 1.39 times more volatile than BRUNELLO C SPA. It trades about -0.08 of its total potential returns per unit of risk. BRUNELLO C SPA is currently generating about 0.27 per unit of volatility. If you would invest  9,305  in BRUNELLO C SPA on October 24, 2024 and sell it today you would earn a total of  2,295  from holding BRUNELLO C SPA or generate 24.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Shin Etsu Chemical Co  vs.  BRUNELLO C SPA

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BRUNELLO C SPA

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BRUNELLO C SPA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BRUNELLO C unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shin-Etsu Chemical and BRUNELLO C

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

The idea behind Shin Etsu Chemical Co and BRUNELLO C SPA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..