Correlation Between Sumitomo Mitsui and Longfor Group
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Longfor Group 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 Longfor Group 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 Longfor Group Holdings, you can compare the effects of market volatilities on Sumitomo Mitsui and Longfor Group 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 Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Longfor Group.
Diversification Opportunities for Sumitomo Mitsui and Longfor Group
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sumitomo and Longfor is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings 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 Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Longfor Group go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Longfor Group
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.5 times more return on investment than Longfor Group. However, Sumitomo Mitsui Construction is 2.02 times less risky than Longfor Group. It trades about 0.16 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about -0.2 per unit of risk. If you would invest 228.00 in Sumitomo Mitsui Construction on September 3, 2024 and sell it today you would earn a total of 14.00 from holding Sumitomo Mitsui Construction or generate 6.14% 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. Longfor Group Holdings
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Longfor Group Holdings |
Sumitomo Mitsui and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Longfor Group
The main advantage of trading using opposite Sumitomo Mitsui and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Longfor Group 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 Longfor Group will offset losses from the drop in Longfor Group's long position.| Sumitomo Mitsui vs. Public Storage | Sumitomo Mitsui vs. TERADATA | Sumitomo Mitsui vs. Fidelity National Information | Sumitomo Mitsui vs. Darden Restaurants |
| Longfor Group vs. AUST AGRICULTURAL | Longfor Group vs. Sumitomo Mitsui Construction | Longfor Group vs. Air Lease | Longfor Group vs. Australian Agricultural |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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