Correlation Between American Helium and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both American Helium and Sumitomo Metal 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 American Helium and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Helium and Sumitomo Metal Mining, you can compare the effects of market volatilities on American Helium and Sumitomo Metal 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 American Helium with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Helium and Sumitomo Metal.
Diversification Opportunities for American Helium and Sumitomo Metal
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Sumitomo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Helium and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining and American Helium 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 American Helium are associated (or correlated) with Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of American Helium i.e., American Helium and Sumitomo Metal go up and down completely randomly.
Pair Corralation between American Helium and Sumitomo Metal
Assuming the 90 days horizon American Helium is expected to generate 0.79 times more return on investment than Sumitomo Metal. However, American Helium is 1.26 times less risky than Sumitomo Metal. It trades about 0.21 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.22 per unit of risk. If you would invest 10.00 in American Helium on August 30, 2024 and sell it today you would earn a total of 1.00 from holding American Helium or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Helium vs. Sumitomo Metal Mining
Performance |
| Timeline |
| American Helium |
| Sumitomo Metal Mining |
American Helium and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Helium and Sumitomo Metal
The main advantage of trading using opposite American Helium and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Helium position performs unexpectedly, Sumitomo Metal 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 Sumitomo Metal will offset losses from the drop in Sumitomo Metal's long position.| American Helium vs. Huntsman Exploration | American Helium vs. Aurelia Metals Limited | American Helium vs. Adriatic Metals PLC | American Helium vs. Progressive Planet Solutions |
| Sumitomo Metal vs. Rockridge Resources | Sumitomo Metal vs. Ameriwest Lithium | Sumitomo Metal vs. Osisko Metals Incorporated | Sumitomo Metal vs. Volt Lithium Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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