Correlation Between Sumitomo Mitsui and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and KIMBALL ELECTRONICS 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 Mitsui and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on Sumitomo Mitsui and KIMBALL ELECTRONICS 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 Mitsui with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and KIMBALL ELECTRONICS.
Diversification Opportunities for Sumitomo Mitsui and KIMBALL ELECTRONICS
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and KIMBALL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and Sumitomo Mitsui 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 Mitsui Construction are associated (or correlated) with KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and KIMBALL ELECTRONICS
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 1.2 times more return on investment than KIMBALL ELECTRONICS. However, Sumitomo Mitsui is 1.2 times more volatile than KIMBALL ELECTRONICS. It trades about 0.19 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.2 per unit of risk. If you would invest 230.00 in Sumitomo Mitsui Construction on September 24, 2024 and sell it today you would earn a total of 18.00 from holding Sumitomo Mitsui Construction or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| KIMBALL ELECTRONICS |
Sumitomo Mitsui and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and KIMBALL ELECTRONICS
The main advantage of trading using opposite Sumitomo Mitsui and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS will offset losses from the drop in KIMBALL ELECTRONICS's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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