Correlation Between Sumitomo Mitsui and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Air Liquide 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 Air Liquide 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 Air Liquide SA, you can compare the effects of market volatilities on Sumitomo Mitsui and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Air Liquide.
Diversification Opportunities for Sumitomo Mitsui and Air Liquide
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and Air is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Air Liquide go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Air Liquide
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 2.46 times more return on investment than Air Liquide. However, Sumitomo Mitsui is 2.46 times more volatile than Air Liquide SA. It trades about 0.19 of its potential returns per unit of risk. Air Liquide SA is currently generating about 0.01 per unit of risk. If you would invest 232.00 in Sumitomo Mitsui Construction on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Sumitomo Mitsui Construction or generate 8.62% 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. Air Liquide SA
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Air Liquide SA |
Sumitomo Mitsui and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Air Liquide
The main advantage of trading using opposite Sumitomo Mitsui and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| Air Liquide vs. SPORTING | Air Liquide vs. USWE SPORTS AB | Air Liquide vs. Transport International Holdings | Air Liquide vs. AGNC INVESTMENT |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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