Correlation Between Sumitomo Rubber and Semperit Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Semperit Aktiengesellscha 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 Semperit Aktiengesellscha 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 Semperit Aktiengesellschaft Holding, you can compare the effects of market volatilities on Sumitomo Rubber and Semperit Aktiengesellscha 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 Semperit Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Semperit Aktiengesellscha.
Diversification Opportunities for Sumitomo Rubber and Semperit Aktiengesellscha
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Semperit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Semperit Aktiengesellschaft Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semperit Aktiengesellscha 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 Semperit Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semperit Aktiengesellscha has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Semperit Aktiengesellscha go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Semperit Aktiengesellscha
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.22 times more return on investment than Semperit Aktiengesellscha. However, Sumitomo Rubber is 1.22 times more volatile than Semperit Aktiengesellschaft Holding. It trades about 0.32 of its potential returns per unit of risk. Semperit Aktiengesellschaft Holding is currently generating about -0.02 per unit of risk. If you would invest 905.00 in Sumitomo Rubber Industries on August 29, 2024 and sell it today you would earn a total of 135.00 from holding Sumitomo Rubber Industries or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Semperit Aktiengesellschaft Ho
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Semperit Aktiengesellscha |
Sumitomo Rubber and Semperit Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Semperit Aktiengesellscha
The main advantage of trading using opposite Sumitomo Rubber and Semperit Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Semperit Aktiengesellscha 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 Semperit Aktiengesellscha will offset losses from the drop in Semperit Aktiengesellscha's long position.| Sumitomo Rubber vs. TRAINLINE PLC LS | Sumitomo Rubber vs. Liberty Broadband | Sumitomo Rubber vs. Air Transport Services | Sumitomo Rubber vs. TSOGO SUN GAMING |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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