Correlation Between Sumitomo Rubber and Radian
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Radian 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 Radian 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 Radian Group, you can compare the effects of market volatilities on Sumitomo Rubber and Radian 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 Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Radian.
Diversification Opportunities for Sumitomo Rubber and Radian
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sumitomo and Radian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group 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 Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Radian go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Radian
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 4.41 times less return on investment than Radian. But when comparing it to its historical volatility, Sumitomo Rubber Industries is 1.31 times less risky than Radian. It trades about 0.05 of its potential returns per unit of risk. Radian Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,040 in Radian Group on October 20, 2024 and sell it today you would earn a total of 140.00 from holding Radian Group or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Radian Group
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Radian Group |
Sumitomo Rubber and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Radian
The main advantage of trading using opposite Sumitomo Rubber and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| Sumitomo Rubber vs. Datang International Power | Sumitomo Rubber vs. DAIDO METAL TD | Sumitomo Rubber vs. MICRONIC MYDATA | Sumitomo Rubber vs. ANTA SPORTS PRODUCT |
| Radian vs. Sumitomo Rubber Industries | Radian vs. APPLIED MATERIALS | Radian vs. VIENNA INSURANCE GR | Radian vs. Applied Materials |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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