Correlation Between Sumitomo Rubber and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and ALGOMA STEEL 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 ALGOMA STEEL 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 ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Sumitomo Rubber and ALGOMA STEEL 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 ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and ALGOMA STEEL.
Diversification Opportunities for Sumitomo Rubber and ALGOMA STEEL
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and ALGOMA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and ALGOMA STEEL
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 2.46 times more return on investment than ALGOMA STEEL. However, Sumitomo Rubber is 2.46 times more volatile than ALGOMA STEEL GROUP. It trades about 0.05 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.06 per unit of risk. If you would invest 346.00 in Sumitomo Rubber Industries on August 29, 2024 and sell it today you would earn a total of 694.00 from holding Sumitomo Rubber Industries or generate 200.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| ALGOMA STEEL GROUP |
Sumitomo Rubber and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and ALGOMA STEEL
The main advantage of trading using opposite Sumitomo Rubber and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| Sumitomo Rubber vs. Bridgestone | Sumitomo Rubber vs. Advanced Drainage Systems | Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Polyplex Public |
| ALGOMA STEEL vs. PLAY2CHILL SA ZY | ALGOMA STEEL vs. GREENX METALS LTD | ALGOMA STEEL vs. Harmony Gold Mining | ALGOMA STEEL vs. GRIFFIN MINING LTD |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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