Correlation Between Sumitomo Rubber and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle Group, you can compare the effects of market volatilities on Sumitomo Rubber and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Commercial Vehicle.
Diversification Opportunities for Sumitomo Rubber and Commercial Vehicle
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and Commercial is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Commercial Vehicle go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Commercial Vehicle
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 0.8 times more return on investment than Commercial Vehicle. However, Sumitomo Rubber Industries is 1.24 times less risky than Commercial Vehicle. It trades about 0.02 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.09 per unit of risk. If you would invest 960.00 in Sumitomo Rubber Industries on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Sumitomo Rubber Industries or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Commercial Vehicle Group
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Commercial Vehicle |
Sumitomo Rubber and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Commercial Vehicle
The main advantage of trading using opposite Sumitomo Rubber and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Essentra plc | Sumitomo Rubber vs. Semperit Aktiengesellschaft Holding | Sumitomo Rubber vs. PT Gajah Tunggal |
| Commercial Vehicle vs. Casio Computer CoLtd | Commercial Vehicle vs. Bumrungrad Hospital Public | Commercial Vehicle vs. Microchip Technology Incorporated | Commercial Vehicle vs. Micron Technology |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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