Correlation Between Sumitomo Rubber and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Elmos Semiconductor 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 Elmos Semiconductor 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 Elmos Semiconductor SE, you can compare the effects of market volatilities on Sumitomo Rubber and Elmos Semiconductor 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 Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Elmos Semiconductor.
Diversification Opportunities for Sumitomo Rubber and Elmos Semiconductor
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Elmos is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Elmos Semiconductor
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 1.05 times less return on investment than Elmos Semiconductor. But when comparing it to its historical volatility, Sumitomo Rubber Industries is 2.23 times less risky than Elmos Semiconductor. It trades about 0.31 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,460 in Elmos Semiconductor SE on August 31, 2024 and sell it today you would earn a total of 700.00 from holding Elmos Semiconductor SE or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Elmos Semiconductor SE
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Elmos Semiconductor |
Sumitomo Rubber and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Elmos Semiconductor
The main advantage of trading using opposite Sumitomo Rubber and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor's long position.| Sumitomo Rubber vs. FIREWEED METALS P | Sumitomo Rubber vs. Adtalem Global Education | Sumitomo Rubber vs. DeVry Education Group | Sumitomo Rubber vs. TAL Education Group |
| Elmos Semiconductor vs. NVIDIA | Elmos Semiconductor vs. Taiwan Semiconductor Manufacturing | Elmos Semiconductor vs. Advanced Micro Devices | Elmos Semiconductor vs. Intel |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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