Correlation Between Shin Etsu and Q2M Managementberatu

Can any of the company-specific risk be diversified away by investing in both Shin Etsu and Q2M Managementberatu 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 Q2M Managementberatu 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 Q2M Managementberatung AG, you can compare the effects of market volatilities on Shin Etsu and Q2M Managementberatu 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 Q2M Managementberatu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Q2M Managementberatu.

Diversification Opportunities for Shin Etsu and Q2M Managementberatu

0.6

Correlation Coefficient

Shin Etsu  Q2M Managementberatu

Poor diversification

The 3 months correlation between Shin and Q2M is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Q2M Managementberatung AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2M Managementberatung 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 Q2M Managementberatu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2M Managementberatung has no effect on the direction of Shin Etsu i.e., Shin Etsu and Q2M Managementberatu go up and down completely randomly.

Pair Corralation between Shin Etsu and Q2M Managementberatu

Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Q2M Managementberatu. In addition to that, Shin Etsu is 7.58 times more volatile than Q2M Managementberatung AG. It trades about -0.13 of its total potential returns per unit of risk. Q2M Managementberatung AG is currently generating about -0.13 per unit of volatility. If you would invest  100.00  in Q2M Managementberatung AG on September 27, 2024 and sell it today you would lose (2.00) from holding Q2M Managementberatung AG or give up 2.0% 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.  Q2M Managementberatung AG

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

Q2M Managementberatung

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q2M Managementberatung AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Q2M Managementberatu is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shin Etsu and Q2M Managementberatu

The main advantage of trading using opposite Shin Etsu and Q2M Managementberatu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu position performs unexpectedly, Q2M Managementberatu 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 Q2M Managementberatu will offset losses from the drop in Q2M Managementberatu's long position.

The idea behind Shin Etsu Chemical Co and Q2M Managementberatung AG 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.