Correlation Between CENTURIA OFFICE and Shin Etsu

Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE 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 CENTURIA OFFICE and Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CENTURIA OFFICE REIT and Shin Etsu Chemical Co, you can compare the effects of market volatilities on CENTURIA OFFICE 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 CENTURIA OFFICE with a short position of Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Shin Etsu.

Diversification Opportunities for CENTURIA OFFICE and Shin Etsu

0.57

Correlation Coefficient

CENTURIA OFFICE  Shin Etsu

Very weak diversification

The 3 months correlation between CENTURIA and Shin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT 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 CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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 CENTURIA OFFICE i.e., CENTURIA OFFICE and Shin Etsu go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Shin Etsu

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the Shin Etsu. But the stock apears to be less risky and, when comparing its historical volatility, CENTURIA OFFICE REIT is 1.1 times less risky than Shin Etsu. The stock trades about -0.1 of its potential returns per unit of risk. The Shin Etsu Chemical Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,834  in Shin Etsu Chemical Co on April 6, 2025 and sell it today you would lose (34.00) from holding Shin Etsu Chemical Co or give up 1.2% of portfolio value over 90 days.

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

CENTURIA OFFICE REIT  vs.  Shin Etsu Chemical Co

CENTURIA OFFICE REIT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CENTURIA OFFICE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Shin Etsu Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Etsu Chemical Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shin Etsu reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CENTURIA OFFICE and Shin Etsu

The main advantage of trading using opposite CENTURIA OFFICE and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.