Correlation Between Sumitomo Rubber and NKT A/S
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and NKT A/S 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 NKT A/S 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 NKT AS, you can compare the effects of market volatilities on Sumitomo Rubber and NKT A/S 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 NKT A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and NKT A/S.
Diversification Opportunities for Sumitomo Rubber and NKT A/S
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and NKT is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT A/S 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 NKT A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT A/S has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and NKT A/S go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and NKT A/S
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 7.78 times less return on investment than NKT A/S. In addition to that, Sumitomo Rubber is 1.09 times more volatile than NKT AS. It trades about 0.01 of its total potential returns per unit of risk. NKT AS is currently generating about 0.05 per unit of volatility. If you would invest 6,000 in NKT AS on September 4, 2024 and sell it today you would earn a total of 1,335 from holding NKT AS or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. NKT AS
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| NKT A/S |
Sumitomo Rubber and NKT A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and NKT A/S
The main advantage of trading using opposite Sumitomo Rubber and NKT A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, NKT A/S 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 NKT A/S will offset losses from the drop in NKT A/S's long position.| Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Semperit Aktiengesellschaft Holding | Sumitomo Rubber vs. PT Gajah Tunggal |
| NKT A/S vs. PennantPark Investment | NKT A/S vs. Warner Music Group | NKT A/S vs. COMMERCIAL VEHICLE | NKT A/S vs. Mitsui Chemicals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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