Correlation Between H FARM and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both H FARM and Sumitomo Mitsui 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 H FARM and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H FARM SPA and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on H FARM and Sumitomo Mitsui 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 H FARM with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and Sumitomo Mitsui.
Diversification Opportunities for H FARM and Sumitomo Mitsui
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 5JQ and Sumitomo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons and H FARM 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 H FARM SPA are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of H FARM i.e., H FARM and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between H FARM and Sumitomo Mitsui
Assuming the 90 days horizon H FARM SPA is expected to generate 3.38 times more return on investment than Sumitomo Mitsui. However, H FARM is 3.38 times more volatile than Sumitomo Mitsui Construction. It trades about 0.0 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about -0.02 per unit of risk. If you would invest 20.00 in H FARM SPA on August 28, 2024 and sell it today you would lose (10.00) from holding H FARM SPA or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H FARM SPA vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| H FARM SPA |
| Sumitomo Mitsui Cons |
H FARM and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H FARM and Sumitomo Mitsui
The main advantage of trading using opposite H FARM and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| H FARM vs. Dairy Farm International | H FARM vs. JJ SNACK FOODS | H FARM vs. Cal Maine Foods | H FARM vs. TYSON FOODS A |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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