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
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Plastic is 0.42. 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 under-perform the Plastic Omnium. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Rubber Industries is 2.55 times less risky than Plastic Omnium. The stock trades about -0.04 of its potential returns per unit of risk. The Plastic Omnium is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 995.00 in Plastic Omnium on October 29, 2024 and sell it today you would earn a total of 107.00 from holding Plastic Omnium or generate 10.75% 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. 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. DATAGROUP SE | Sumitomo Rubber vs. Electronic Arts | Sumitomo Rubber vs. ULTRA CLEAN HLDGS | Sumitomo Rubber vs. Datadog |
| Plastic Omnium vs. Lery Seafood Group | Plastic Omnium vs. PLANT VEDA FOODS | Plastic Omnium vs. BOSTON BEER A | Plastic Omnium vs. National Beverage Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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