Correlation Between Shin-Etsu Chemical and Altech Batteries
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Altech Batteries 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 Altech Batteries 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 Altech Batteries Limited, you can compare the effects of market volatilities on Shin-Etsu Chemical and Altech Batteries 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 Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Altech Batteries.
Diversification Opportunities for Shin-Etsu Chemical and Altech Batteries
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin-Etsu and Altech is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries 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 Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Altech Batteries go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Altech Batteries
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Altech Batteries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 2.29 times less risky than Altech Batteries. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Altech Batteries Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Altech Batteries Limited on December 5, 2024 and sell it today you would lose (0.28) from holding Altech Batteries Limited or give up 8.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.72% |
Values | Daily Returns |
Shin Etsu Chemical Co vs. Altech Batteries Limited
Performance |
Timeline |
Shin Etsu Chemical |
Altech Batteries |
Shin-Etsu Chemical and Altech Batteries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin-Etsu Chemical and Altech Batteries
The main advantage of trading using opposite Shin-Etsu Chemical and Altech Batteries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Altech Batteries 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 Altech Batteries will offset losses from the drop in Altech Batteries' long position.Shin-Etsu Chemical vs. Kuraray Co | Shin-Etsu Chemical vs. Mitsubishi Chemical Holdings | Shin-Etsu Chemical vs. Sumitomo Chemical Co | Shin-Etsu Chemical vs. Valhi Inc |
Altech Batteries vs. Hertz Global Hldgs | Altech Batteries vs. Integrated Media Technology | Altech Batteries vs. Starwin Media Holdings | Altech Batteries vs. NetEase |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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