Correlation Between Sumitomo Mitsui and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY, you can compare the effects of market volatilities on Sumitomo Mitsui and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and BANK HANDLOWY.
Diversification Opportunities for Sumitomo Mitsui and BANK HANDLOWY
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and BANK is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and BANK HANDLOWY
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 2.11 times more return on investment than BANK HANDLOWY. However, Sumitomo Mitsui is 2.11 times more volatile than BANK HANDLOWY. It trades about 0.08 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about -0.04 per unit of risk. If you would invest 242.00 in Sumitomo Mitsui Construction on September 20, 2024 and sell it today you would earn a total of 18.00 from holding Sumitomo Mitsui Construction or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. BANK HANDLOWY
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| BANK HANDLOWY |
Sumitomo Mitsui and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and BANK HANDLOWY
The main advantage of trading using opposite Sumitomo Mitsui and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Microsoft |
| BANK HANDLOWY vs. PTT Global Chemical | BANK HANDLOWY vs. Magnachip Semiconductor | BANK HANDLOWY vs. Shin Etsu Chemical Co | BANK HANDLOWY vs. INDO RAMA SYNTHETIC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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