Correlation Between Sumitomo Rubber and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and GOLD ROAD 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 GOLD ROAD 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 GOLD ROAD RES, you can compare the effects of market volatilities on Sumitomo Rubber and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and GOLD ROAD.
Diversification Opportunities for Sumitomo Rubber and GOLD ROAD
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sumitomo and GOLD is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and GOLD ROAD go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and GOLD ROAD
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 0.88 times more return on investment than GOLD ROAD. However, Sumitomo Rubber Industries is 1.13 times less risky than GOLD ROAD. It trades about 0.39 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about -0.02 per unit of risk. If you would invest 890.00 in Sumitomo Rubber Industries on August 25, 2024 and sell it today you would earn a total of 160.00 from holding Sumitomo Rubber Industries or generate 17.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. GOLD ROAD RES
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| GOLD ROAD RES |
Sumitomo Rubber and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and GOLD ROAD
The main advantage of trading using opposite Sumitomo Rubber and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| Sumitomo Rubber vs. RCM TECHNOLOGIES | Sumitomo Rubber vs. AUSTEVOLL SEAFOOD | Sumitomo Rubber vs. Tyson Foods | Sumitomo Rubber vs. Sunny Optical Technology |
| GOLD ROAD vs. Rayonier Advanced Materials | GOLD ROAD vs. VULCAN MATERIALS | GOLD ROAD vs. EAGLE MATERIALS | GOLD ROAD vs. Sumitomo Rubber Industries |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |