Correlation Between Sumitomo Rubber and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on Sumitomo Rubber and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and THRACE PLASTICS.
Diversification Opportunities for Sumitomo Rubber and THRACE PLASTICS
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sumitomo and THRACE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and THRACE PLASTICS
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 3.89 times more return on investment than THRACE PLASTICS. However, Sumitomo Rubber is 3.89 times more volatile than THRACE PLASTICS. It trades about 0.05 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.01 per unit of risk. If you would invest 355.00 in Sumitomo Rubber Industries on November 1, 2024 and sell it today you would earn a total of 715.00 from holding Sumitomo Rubber Industries or generate 201.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. THRACE PLASTICS
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| THRACE PLASTICS |
Sumitomo Rubber and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and THRACE PLASTICS
The main advantage of trading using opposite Sumitomo Rubber and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Sumitomo Rubber vs. Tencent Music Entertainment | Sumitomo Rubber vs. ONWARD MEDICAL BV | Sumitomo Rubber vs. CVR Medical Corp | Sumitomo Rubber vs. Japan Medical Dynamic |
| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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