Correlation Between Sumitomo Rubber and SANOK RUBBER
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and SANOK RUBBER 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 Sumitomo Rubber and SANOK RUBBER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Rubber Industries and SANOK RUBBER ZY, you can compare the effects of market volatilities on Sumitomo Rubber and SANOK RUBBER 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 Sumitomo Rubber with a short position of SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and SANOK RUBBER.
Diversification Opportunities for Sumitomo Rubber and SANOK RUBBER
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and SANOK is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and Sumitomo Rubber 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 Sumitomo Rubber Industries are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and SANOK RUBBER go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and SANOK RUBBER
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to under-perform the SANOK RUBBER. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Rubber Industries is 1.6 times less risky than SANOK RUBBER. The stock trades about -0.04 of its potential returns per unit of risk. The SANOK RUBBER ZY is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 503.00 in SANOK RUBBER ZY on October 29, 2024 and sell it today you would earn a total of 5.00 from holding SANOK RUBBER ZY or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. SANOK RUBBER ZY
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| SANOK RUBBER ZY |
Sumitomo Rubber and SANOK RUBBER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and SANOK RUBBER
The main advantage of trading using opposite Sumitomo Rubber and SANOK RUBBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, SANOK RUBBER 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 SANOK RUBBER will offset losses from the drop in SANOK RUBBER's long position.| Sumitomo Rubber vs. DATAGROUP SE | Sumitomo Rubber vs. Electronic Arts | Sumitomo Rubber vs. ULTRA CLEAN HLDGS | Sumitomo Rubber vs. Datadog |
| SANOK RUBBER vs. Luckin Coffee | SANOK RUBBER vs. Wizz Air Holdings | SANOK RUBBER vs. China Resources Beer | SANOK RUBBER vs. ALTAIR RES 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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