Correlation Between INSURANCE AUST and SHIN-ETSU CHEMICAL

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

By analyzing existing cross correlation between INSURANCE AUST GRP and SHIN ETSU CHEMICAL , you can compare the effects of market volatilities on INSURANCE AUST and SHIN-ETSU CHEMICAL 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 INSURANCE AUST with a short position of SHIN-ETSU CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and SHIN-ETSU CHEMICAL.

Diversification Opportunities for INSURANCE AUST and SHIN-ETSU CHEMICAL

-0.55

Correlation Coefficient

INSURANCE AUST  SHIN-ETSU CHEMICAL

Excellent diversification

The 3 months correlation between INSURANCE and SHIN-ETSU is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with SHIN-ETSU CHEMICAL. 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 INSURANCE AUST i.e., INSURANCE AUST and SHIN-ETSU CHEMICAL go up and down completely randomly.

Pair Corralation between INSURANCE AUST and SHIN-ETSU CHEMICAL

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 1.11 times more return on investment than SHIN-ETSU CHEMICAL. However, INSURANCE AUST is 1.11 times more volatile than SHIN ETSU CHEMICAL . It trades about 0.12 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.17 per unit of risk. If you would invest  442.00  in INSURANCE AUST GRP on September 25, 2024 and sell it today you would earn a total of  52.00  from holding INSURANCE AUST GRP or generate 11.76% return on investment over 90 days.

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

INSURANCE AUST GRP  vs.  SHIN ETSU CHEMICAL

INSURANCE AUST GRP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, INSURANCE AUST may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 uncertain performance in the last few months, the Stock's technical 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.

Pair Trading with INSURANCE AUST and SHIN-ETSU CHEMICAL

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

The idea behind INSURANCE AUST GRP and SHIN ETSU CHEMICAL 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.