Correlation Between Shin-Etsu Chemical and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Shin-Etsu Chemical and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Perseus Mining.
Diversification Opportunities for Shin-Etsu Chemical and Perseus Mining
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shin-Etsu and Perseus is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Perseus Mining go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Perseus Mining
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Perseus Mining. But the stock apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 1.11 times less risky than Perseus Mining. The stock trades about -0.12 of its potential returns per unit of risk. The Perseus Mining Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 151.00 in Perseus Mining Limited on December 28, 2024 and sell it today you would earn a total of 36.00 from holding Perseus Mining Limited or generate 23.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shin Etsu Chemical Co vs. Perseus Mining Limited
Performance |
Timeline |
Shin Etsu Chemical |
Perseus Mining |
Shin-Etsu Chemical and Perseus Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin-Etsu Chemical and Perseus Mining
The main advantage of trading using opposite Shin-Etsu Chemical and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.Shin-Etsu Chemical vs. Siemens Healthineers AG | Shin-Etsu Chemical vs. Planet Fitness | Shin-Etsu Chemical vs. National Health Investors | Shin-Etsu Chemical vs. Molina Healthcare |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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