Correlation Between Sumitomo Mitsui and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and NTG Nordic 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 NTG Nordic 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 NTG Nordic Transport, you can compare the effects of market volatilities on Sumitomo Mitsui and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and NTG Nordic.
Diversification Opportunities for Sumitomo Mitsui and NTG Nordic
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and NTG is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and NTG Nordic go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and NTG Nordic
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.72 times more return on investment than NTG Nordic. However, Sumitomo Mitsui Construction is 1.39 times less risky than NTG Nordic. It trades about 0.03 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.02 per unit of risk. If you would invest 236.00 in Sumitomo Mitsui Construction on September 24, 2024 and sell it today you would earn a total of 12.00 from holding Sumitomo Mitsui Construction or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. NTG Nordic Transport
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| NTG Nordic Transport |
Sumitomo Mitsui and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and NTG Nordic
The main advantage of trading using opposite Sumitomo Mitsui and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| NTG Nordic vs. MITSUBISHI STEEL MFG | NTG Nordic vs. ABO GROUP ENVIRONMENT | NTG Nordic vs. Khiron Life Sciences | NTG Nordic vs. United States Steel |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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