Correlation Between SHIN-ETSU CHEMICAL and MSCI

Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL and MSCI 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 MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SHIN ETSU CHEMICAL and MSCI Inc, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and MSCI.

Diversification Opportunities for SHIN-ETSU CHEMICAL and MSCI

-0.5

Correlation Coefficient

SHIN-ETSU CHEMICAL  MSCI

Very good diversification

The 3 months correlation between SHIN-ETSU and MSCI is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc 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 are associated (or correlated) with MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and MSCI go up and down completely randomly.

Pair Corralation between SHIN-ETSU CHEMICAL and MSCI

Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the MSCI. In addition to that, SHIN-ETSU CHEMICAL is 1.39 times more volatile than MSCI Inc. It trades about -0.27 of its total potential returns per unit of risk. MSCI Inc is currently generating about -0.16 per unit of volatility. If you would invest  60,220  in MSCI Inc on October 12, 2024 and sell it today you would lose (1,740) from holding MSCI Inc or give up 2.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SHIN ETSU CHEMICAL  vs.  MSCI Inc

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIN ETSU CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MSCI Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SHIN-ETSU CHEMICAL and MSCI

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

The idea behind SHIN ETSU CHEMICAL and MSCI Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.