Correlation Between Sumitomo Mitsui and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and GOLD ROAD 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 GOLD ROAD 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 GOLD ROAD RES, you can compare the effects of market volatilities on Sumitomo Mitsui and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and GOLD ROAD.
Diversification Opportunities for Sumitomo Mitsui and GOLD ROAD
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and GOLD is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and GOLD ROAD go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and GOLD ROAD
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.86 times more return on investment than GOLD ROAD. However, Sumitomo Mitsui Construction is 1.16 times less risky than GOLD ROAD. It trades about 0.03 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about -0.01 per unit of risk. If you would invest 228.00 in Sumitomo Mitsui Construction on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Sumitomo Mitsui Construction or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. GOLD ROAD RES
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| GOLD ROAD RES |
Sumitomo Mitsui and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and GOLD ROAD
The main advantage of trading using opposite Sumitomo Mitsui and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Superior Plus Corp | Sumitomo Mitsui vs. SIVERS SEMICONDUCTORS AB |
| GOLD ROAD vs. Apple Inc | GOLD ROAD vs. Apple Inc | GOLD ROAD vs. Superior Plus Corp | GOLD ROAD vs. SIVERS SEMICONDUCTORS AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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