Correlation Between SHIN-ETSU CHEMICAL and Zoom Video

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

By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Zoom Video Communications, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL and Zoom Video 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 Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Zoom Video.

Diversification Opportunities for SHIN-ETSU CHEMICAL and Zoom Video

0.46

Correlation Coefficient

SHIN-ETSU CHEMICAL  Zoom Video

Very weak diversification

The 3 months correlation between SHIN-ETSU and Zoom is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications 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 are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Zoom Video go up and down completely randomly.

Pair Corralation between SHIN-ETSU CHEMICAL and Zoom Video

Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 1.48 times more return on investment than Zoom Video. However, SHIN-ETSU CHEMICAL is 1.48 times more volatile than Zoom Video Communications. It trades about 0.12 of its potential returns per unit of risk. Zoom Video Communications is currently generating about -0.04 per unit of risk. If you would invest  2,434  in SHIN ETSU CHEMICAL on April 25, 2025 and sell it today you would earn a total of  386.00  from holding SHIN ETSU CHEMICAL or generate 15.86% return on investment over 90 days.

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

SHIN ETSU CHEMICAL   vs.  Zoom Video Communications

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SHIN ETSU CHEMICAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, SHIN-ETSU CHEMICAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zoom Video Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoom Video Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zoom Video is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SHIN-ETSU CHEMICAL and Zoom Video

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

The idea behind SHIN ETSU CHEMICAL and Zoom Video Communications 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.