Correlation Between Sumitomo Rubber and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE, you can compare the effects of market volatilities on Sumitomo Rubber and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and GEELY AUTOMOBILE.
Diversification Opportunities for Sumitomo Rubber and GEELY AUTOMOBILE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and GEELY is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and GEELY AUTOMOBILE
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 5.58 times less return on investment than GEELY AUTOMOBILE. But when comparing it to its historical volatility, Sumitomo Rubber Industries is 1.16 times less risky than GEELY AUTOMOBILE. It trades about 0.02 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 93.00 in GEELY AUTOMOBILE on September 4, 2024 and sell it today you would earn a total of 81.00 from holding GEELY AUTOMOBILE or generate 87.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| GEELY AUTOMOBILE |
Sumitomo Rubber and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and GEELY AUTOMOBILE
The main advantage of trading using opposite Sumitomo Rubber and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE'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 |
| GEELY AUTOMOBILE vs. Transport International Holdings | GEELY AUTOMOBILE vs. BROADWIND ENRGY | GEELY AUTOMOBILE vs. SEKISUI CHEMICAL | GEELY AUTOMOBILE vs. Gaztransport Technigaz SA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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