Correlation Between Sumitomo Rubber and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on Sumitomo Rubber and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Plastic Omnium.
Diversification Opportunities for Sumitomo Rubber and Plastic Omnium
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Plastic is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Plastic Omnium go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Plastic Omnium
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.01 times more return on investment than Plastic Omnium. However, Sumitomo Rubber is 1.01 times more volatile than Plastic Omnium. It trades about 0.03 of its potential returns per unit of risk. Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest 940.00 in Sumitomo Rubber Industries on August 25, 2024 and sell it today you would earn a total of 110.00 from holding Sumitomo Rubber Industries or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Plastic Omnium
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Plastic Omnium |
Sumitomo Rubber and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Plastic Omnium
The main advantage of trading using opposite Sumitomo Rubber and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Sumitomo Rubber vs. Bridgestone | Sumitomo Rubber vs. Advanced Drainage Systems | Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Polyplex Public |
| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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