Correlation Between Altech Batteries and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both Altech Batteries and Sumitomo Chemical 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 Altech Batteries and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altech Batteries Limited and Sumitomo Chemical Co, you can compare the effects of market volatilities on Altech Batteries and Sumitomo Chemical 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 Altech Batteries with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altech Batteries and Sumitomo Chemical.
Diversification Opportunities for Altech Batteries and Sumitomo Chemical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Altech and Sumitomo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Altech Batteries Limited and Sumitomo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and Altech Batteries 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 Altech Batteries Limited are associated (or correlated) with Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of Altech Batteries i.e., Altech Batteries and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between Altech Batteries and Sumitomo Chemical
Assuming the 90 days horizon Altech Batteries Limited is expected to under-perform the Sumitomo Chemical. In addition to that, Altech Batteries is 3.36 times more volatile than Sumitomo Chemical Co. It trades about -0.08 of its total potential returns per unit of risk. Sumitomo Chemical Co is currently generating about -0.03 per unit of volatility. If you would invest 1,095 in Sumitomo Chemical Co on November 3, 2024 and sell it today you would lose (16.00) from holding Sumitomo Chemical Co or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Altech Batteries Limited vs. Sumitomo Chemical Co
Performance |
| Timeline |
| Altech Batteries |
| Sumitomo Chemical |
Altech Batteries and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altech Batteries and Sumitomo Chemical
The main advantage of trading using opposite Altech Batteries and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altech Batteries position performs unexpectedly, Sumitomo Chemical 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 Chemical will offset losses from the drop in Sumitomo Chemical's long position.| Altech Batteries vs. Nexstar Broadcasting Group | Altech Batteries vs. Mattel Inc | Altech Batteries vs. Hollywood Intermediate | Altech Batteries vs. Mediag3 |
| Sumitomo Chemical vs. Solvay SA | Sumitomo Chemical vs. Orbia Advance | Sumitomo Chemical vs. Braskem SA Class | Sumitomo Chemical vs. Dow Inc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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