Correlation Between Sumitomo Rubber and HEXINDO ADIPERKASA
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA, you can compare the effects of market volatilities on Sumitomo Rubber and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and HEXINDO ADIPERKASA.
Diversification Opportunities for Sumitomo Rubber and HEXINDO ADIPERKASA
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sumitomo and HEXINDO is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and HEXINDO ADIPERKASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXINDO ADIPERKASA has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and HEXINDO ADIPERKASA go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and HEXINDO ADIPERKASA
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.8 times more return on investment than HEXINDO ADIPERKASA. However, Sumitomo Rubber is 1.8 times more volatile than HEXINDO ADIPERKASA. It trades about 0.05 of its potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about 0.01 per unit of risk. If you would invest 344.00 in Sumitomo Rubber Industries on September 2, 2024 and sell it today you would earn a total of 666.00 from holding Sumitomo Rubber Industries or generate 193.6% 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. HEXINDO ADIPERKASA
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| HEXINDO ADIPERKASA |
Sumitomo Rubber and HEXINDO ADIPERKASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and HEXINDO ADIPERKASA
The main advantage of trading using opposite Sumitomo Rubber and HEXINDO ADIPERKASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA will offset losses from the drop in HEXINDO ADIPERKASA's long position.The idea behind Sumitomo Rubber Industries and HEXINDO ADIPERKASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HEXINDO ADIPERKASA vs. EAGLE MATERIALS | HEXINDO ADIPERKASA vs. STORE ELECTRONIC | HEXINDO ADIPERKASA vs. Eagle Materials | HEXINDO ADIPERKASA vs. Sumitomo Rubber Industries |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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