Correlation Between SHIN ETSU and Shin Etsu

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

Diversification Opportunities for SHIN ETSU and Shin Etsu

0.92

Correlation Coefficient

SHIN ETSU  Shin Etsu

Almost no diversification

The 3 months correlation between SHIN and Shin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical 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 are associated (or correlated) with Shin Etsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of SHIN ETSU i.e., SHIN ETSU and Shin Etsu go up and down completely randomly.

Pair Corralation between SHIN ETSU and Shin Etsu

Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the Shin Etsu. In addition to that, SHIN ETSU is 1.03 times more volatile than Shin Etsu Chemical Co. It trades about -0.12 of its total potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.09 per unit of volatility. If you would invest  3,590  in Shin Etsu Chemical Co on September 22, 2024 and sell it today you would lose (410.00) from holding Shin Etsu Chemical Co or give up 11.42% of portfolio value over 90 days.

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

SHIN ETSU CHEMICAL  vs.  Shin Etsu Chemical Co

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with SHIN ETSU and Shin Etsu

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

The idea behind SHIN ETSU CHEMICAL and Shin Etsu Chemical Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.