Correlation Between PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU

0.5

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4/  SHIN ETSU

Very weak diversification

The 3 months correlation between PROSIEBENSAT1 and SHIN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 1.4 times more return on investment than SHIN ETSU. However, PROSIEBENSAT1 MEDIADR4/ is 1.4 times more volatile than SHIN ETSU CHEMICAL. It trades about -0.07 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.14 per unit of risk. If you would invest  142.00  in PROSIEBENSAT1 MEDIADR4 on September 26, 2024 and sell it today you would lose (19.00) from holding PROSIEBENSAT1 MEDIADR4 or give up 13.38% of portfolio value over 90 days.

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

PROSIEBENSAT1 MEDIADR4  vs.  SHIN ETSU CHEMICAL

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 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.

Pair Trading with PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.