Correlation Between Sumitomo Rubber and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Holmen AB 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 Holmen AB 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 Holmen AB, you can compare the effects of market volatilities on Sumitomo Rubber and Holmen AB 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 Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Holmen AB.
Diversification Opportunities for Sumitomo Rubber and Holmen AB
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Holmen is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB 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 Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Holmen AB go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Holmen AB
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.96 times more return on investment than Holmen AB. However, Sumitomo Rubber is 1.96 times more volatile than Holmen AB. It trades about 0.31 of its potential returns per unit of risk. Holmen AB is currently generating about -0.21 per unit of risk. If you would invest 905.00 in Sumitomo Rubber Industries on August 31, 2024 and sell it today you would earn a total of 125.00 from holding Sumitomo Rubber Industries or generate 13.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Holmen AB
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Holmen AB |
Sumitomo Rubber and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Holmen AB
The main advantage of trading using opposite Sumitomo Rubber and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Holmen AB 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 Holmen AB will offset losses from the drop in Holmen AB'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 |
| Holmen AB vs. SPORTING | Holmen AB vs. PARKEN Sport Entertainment | Holmen AB vs. CarsalesCom | Holmen AB vs. Fukuyama Transporting Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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