Correlation Between Shin-Etsu Chemical and Vicinity Centres

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

Diversification Opportunities for Shin-Etsu Chemical and Vicinity Centres

-0.12

Correlation Coefficient

Shin-Etsu Chemical  Vicinity Centres

Good diversification

The 3 months correlation between Shin-Etsu and Vicinity is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Vicinity Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Vicinity Centres go up and down completely randomly.

Pair Corralation between Shin-Etsu Chemical and Vicinity Centres

Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Vicinity Centres. But the stock apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 1.19 times less risky than Vicinity Centres. The stock trades about -0.11 of its potential returns per unit of risk. The Vicinity Centres is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  116.00  in Vicinity Centres on December 28, 2024 and sell it today you would earn a total of  7.00  from holding Vicinity Centres or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Shin Etsu Chemical Co  vs.  Vicinity Centres

Shin Etsu Chemical

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vicinity Centres

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vicinity Centres are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vicinity Centres may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shin-Etsu Chemical and Vicinity Centres

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

The idea behind Shin Etsu Chemical Co and Vicinity Centres 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.