Correlation Between APPLIED MATERIALS and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Sumitomo Mitsui 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 APPLIED MATERIALS and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on APPLIED MATERIALS and Sumitomo Mitsui 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 APPLIED MATERIALS with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Sumitomo Mitsui.
Diversification Opportunities for APPLIED MATERIALS and Sumitomo Mitsui
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APPLIED and Sumitomo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Sumitomo Mitsui
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the Sumitomo Mitsui. But the stock apears to be less risky and, when comparing its historical volatility, APPLIED MATERIALS is 1.3 times less risky than Sumitomo Mitsui. The stock trades about -0.48 of its potential returns per unit of risk. The Sumitomo Mitsui Construction is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 274.00 in Sumitomo Mitsui Construction on December 13, 2024 and sell it today you would lose (14.00) from holding Sumitomo Mitsui Construction or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| APPLIED MATERIALS |
| Sumitomo Mitsui Cons |
APPLIED MATERIALS and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Sumitomo Mitsui
The main advantage of trading using opposite APPLIED MATERIALS and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Sumitomo Mitsui 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 Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| APPLIED MATERIALS vs. GALENA MINING LTD | APPLIED MATERIALS vs. CITY OFFICE REIT | APPLIED MATERIALS vs. MINCO SILVER | APPLIED MATERIALS vs. Endeavour Mining PLC |
| Sumitomo Mitsui vs. FAST RETAIL ADR | Sumitomo Mitsui vs. Commercial Vehicle Group | Sumitomo Mitsui vs. Costco Wholesale Corp | Sumitomo Mitsui vs. CARSALESCOM |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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