Correlation Between Shin-Etsu Chemical and Sika AG
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Sika AG 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 Sika AG 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 Sika AG, you can compare the effects of market volatilities on Shin-Etsu Chemical and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Sika AG.
Diversification Opportunities for Shin-Etsu Chemical and Sika AG
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shin-Etsu and Sika is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Sika AG go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Sika AG
Assuming the 90 days horizon Shin-Etsu Chemical is expected to generate 40.68 times less return on investment than Sika AG. In addition to that, Shin-Etsu Chemical is 2.95 times more volatile than Sika AG. It trades about 0.0 of its total potential returns per unit of risk. Sika AG is currently generating about 0.09 per unit of volatility. If you would invest 23,558 in Sika AG on December 27, 2024 and sell it today you would earn a total of 2,212 from holding Sika AG or generate 9.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shin Etsu Chemical Co vs. Sika AG
Performance |
Timeline |
Shin Etsu Chemical |
Sika AG |
Shin-Etsu Chemical and Sika AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin-Etsu Chemical and Sika AG
The main advantage of trading using opposite Shin-Etsu Chemical and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's 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 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |