Correlation Between Sumitomo Mitsui and Obducat AB
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Obducat 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 Obducat 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 Obducat AB, you can compare the effects of market volatilities on Sumitomo Mitsui and Obducat 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 Obducat AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Obducat AB.
Diversification Opportunities for Sumitomo Mitsui and Obducat AB
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and Obducat is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Obducat AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obducat 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 Obducat AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obducat AB has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Obducat AB go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Obducat AB
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.11 times more return on investment than Obducat AB. However, Sumitomo Mitsui Construction is 8.77 times less risky than Obducat AB. It trades about 0.03 of its potential returns per unit of risk. Obducat AB is currently generating about -0.07 per unit of risk. If you would invest 230.00 in Sumitomo Mitsui Construction on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Sumitomo Mitsui Construction or generate 0.87% 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. Obducat AB
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Obducat AB |
Sumitomo Mitsui and Obducat AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Obducat AB
The main advantage of trading using opposite Sumitomo Mitsui and Obducat AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Obducat 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 Obducat AB will offset losses from the drop in Obducat AB'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 |
| Obducat AB vs. Daido Steel Co | Obducat AB vs. Playa Hotels Resorts | Obducat AB vs. Insteel Industries | Obducat AB vs. Meli Hotels International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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