Correlation Between Sumitomo Mitsui and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Addtech AB 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 Addtech AB 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 Addtech AB, you can compare the effects of market volatilities on Sumitomo Mitsui and Addtech AB 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 Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Addtech AB.
Diversification Opportunities for Sumitomo Mitsui and Addtech AB
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Addtech is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB 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 Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Addtech AB go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Addtech AB
Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 1.65 times less return on investment than Addtech AB. But when comparing it to its historical volatility, Sumitomo Mitsui Construction is 1.4 times less risky than Addtech AB. It trades about 0.11 of its potential returns per unit of risk. Addtech AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,654 in Addtech AB on November 7, 2024 and sell it today you would earn a total of 142.00 from holding Addtech AB or generate 5.35% 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. Addtech AB
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Addtech AB |
Sumitomo Mitsui and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Addtech AB
The main advantage of trading using opposite Sumitomo Mitsui and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.| Sumitomo Mitsui vs. UNIVERSAL MUSIC GROUP | Sumitomo Mitsui vs. SBM OFFSHORE | Sumitomo Mitsui vs. Amkor Technology | Sumitomo Mitsui vs. Agilent Technologies |
| Addtech AB vs. SAFEROADS HLDGS | Addtech AB vs. Television Broadcasts Limited | Addtech AB vs. CarsalesCom | Addtech AB vs. MARKET VECTR RETAIL |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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