Correlation Between HYDROFARM HLD and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD 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 HYDROFARM HLD and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYDROFARM HLD GRP and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on HYDROFARM HLD 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 HYDROFARM HLD with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Sumitomo Mitsui.
Diversification Opportunities for HYDROFARM HLD and Sumitomo Mitsui
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HYDROFARM and Sumitomo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP 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 HYDROFARM HLD 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 HYDROFARM HLD GRP 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 HYDROFARM HLD i.e., HYDROFARM HLD and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and Sumitomo Mitsui
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 2.79 times more return on investment than Sumitomo Mitsui. However, HYDROFARM HLD is 2.79 times more volatile than Sumitomo Mitsui Construction. It trades about -0.02 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about -0.08 per unit of risk. If you would invest 61.00 in HYDROFARM HLD GRP on August 25, 2024 and sell it today you would lose (3.00) from holding HYDROFARM HLD GRP or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| Sumitomo Mitsui Cons |
HYDROFARM HLD and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and Sumitomo Mitsui
The main advantage of trading using opposite HYDROFARM HLD and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD 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.| HYDROFARM HLD vs. AB Volvo | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech |
| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |