Correlation Between Sumitomo Mitsui and Gemfields Group
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Gemfields Group 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 Gemfields Group 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 Gemfields Group Limited, you can compare the effects of market volatilities on Sumitomo Mitsui and Gemfields Group 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 Gemfields Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Gemfields Group.
Diversification Opportunities for Sumitomo Mitsui and Gemfields Group
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Gemfields is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group 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 Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Gemfields Group go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Gemfields Group
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.27 times more return on investment than Gemfields Group. However, Sumitomo Mitsui Construction is 3.64 times less risky than Gemfields Group. It trades about 0.03 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.04 per unit of risk. If you would invest 228.00 in Sumitomo Mitsui Construction on October 13, 2024 and sell it today you would earn a total of 14.00 from holding Sumitomo Mitsui Construction or generate 6.14% 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. Gemfields Group Limited
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Gemfields Group |
Sumitomo Mitsui and Gemfields Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Gemfields Group
The main advantage of trading using opposite Sumitomo Mitsui and Gemfields Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Gemfields Group 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 Gemfields Group will offset losses from the drop in Gemfields Group's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| Gemfields Group vs. Sumitomo Mitsui Construction | Gemfields Group vs. AGRICULTBK HADR25 YC | Gemfields Group vs. ecotel communication ag | Gemfields Group vs. Chunghwa Telecom Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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