Correlation Between Sumitomo Rubber and SEKISUI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and SEKISUI CHEMICAL 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 SEKISUI CHEMICAL 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 SEKISUI CHEMICAL, you can compare the effects of market volatilities on Sumitomo Rubber and SEKISUI CHEMICAL 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 SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and SEKISUI CHEMICAL.
Diversification Opportunities for Sumitomo Rubber and SEKISUI CHEMICAL
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and SEKISUI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL 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 SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and SEKISUI CHEMICAL go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and SEKISUI CHEMICAL
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to under-perform the SEKISUI CHEMICAL. In addition to that, Sumitomo Rubber is 1.79 times more volatile than SEKISUI CHEMICAL. It trades about -0.01 of its total potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.06 per unit of volatility. If you would invest 1,330 in SEKISUI CHEMICAL on September 3, 2024 and sell it today you would earn a total of 170.00 from holding SEKISUI CHEMICAL or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. SEKISUI CHEMICAL
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| SEKISUI CHEMICAL |
Sumitomo Rubber and SEKISUI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and SEKISUI CHEMICAL
The main advantage of trading using opposite Sumitomo Rubber and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, SEKISUI CHEMICAL 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 SEKISUI CHEMICAL will offset losses from the drop in SEKISUI CHEMICAL's long position.| Sumitomo Rubber vs. COFCO Joycome Foods | Sumitomo Rubber vs. GAMESTOP | Sumitomo Rubber vs. MOLSON RS BEVERAGE | Sumitomo Rubber vs. Tyson Foods |
| SEKISUI CHEMICAL vs. TOTAL GABON | SEKISUI CHEMICAL vs. Walgreens Boots Alliance | SEKISUI CHEMICAL vs. Peak Resources Limited |
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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