Correlation Between Sumitomo Rubber and Singapore Reinsurance
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance, you can compare the effects of market volatilities on Sumitomo Rubber and Singapore Reinsurance 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 Singapore Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Singapore Reinsurance.
Diversification Opportunities for Sumitomo Rubber and Singapore Reinsurance
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Singapore is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Singapore Reinsurance go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Singapore Reinsurance
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 4.37 times less return on investment than Singapore Reinsurance. In addition to that, Sumitomo Rubber is 1.03 times more volatile than Singapore Reinsurance. It trades about 0.02 of its total potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.07 per unit of volatility. If you would invest 2,620 in Singapore Reinsurance on November 8, 2024 and sell it today you would earn a total of 1,180 from holding Singapore Reinsurance or generate 45.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Singapore Reinsurance
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Singapore Reinsurance |
Sumitomo Rubber and Singapore Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Singapore Reinsurance
The main advantage of trading using opposite Sumitomo Rubber and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Singapore Reinsurance 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 Singapore Reinsurance will offset losses from the drop in Singapore Reinsurance's long position.| Sumitomo Rubber vs. RYU Apparel | Sumitomo Rubber vs. American Eagle Outfitters | Sumitomo Rubber vs. China Datang | Sumitomo Rubber vs. BRIT AMER TOBACCO |
| Singapore Reinsurance vs. Tyson Foods | Singapore Reinsurance vs. MTY Food Group | Singapore Reinsurance vs. Austevoll Seafood ASA | Singapore Reinsurance vs. CORNISH METALS INC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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