Correlation Between Sumitomo Mitsui and H FARM
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and H FARM 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 H FARM 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 H FARM SPA, you can compare the effects of market volatilities on Sumitomo Mitsui and H FARM 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 H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and H FARM.
Diversification Opportunities for Sumitomo Mitsui and H FARM
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and 5JQ is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and H FARM go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and H FARM
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.47 times more return on investment than H FARM. However, Sumitomo Mitsui Construction is 2.11 times less risky than H FARM. It trades about 0.01 of its potential returns per unit of risk. H FARM SPA is currently generating about -0.3 per unit of risk. If you would invest 228.00 in Sumitomo Mitsui Construction on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Sumitomo Mitsui Construction or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. H FARM SPA
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| H FARM SPA |
Sumitomo Mitsui and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and H FARM
The main advantage of trading using opposite Sumitomo Mitsui and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Microsoft |
| H FARM vs. Dairy Farm International | H FARM vs. JJ SNACK FOODS | H FARM vs. Cal Maine Foods | H FARM vs. TYSON FOODS A |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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