Correlation Between Air Products and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Sumitomo Chemical, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Sumitomo Chemical.
Diversification Opportunities for Air Products and Sumitomo Chemical
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Sumitomo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and Air Products 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 Air Products and 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 Air Products i.e., Air Products and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between Air Products and Sumitomo Chemical
Assuming the 90 days horizon Air Products and is expected to generate 1.43 times more return on investment than Sumitomo Chemical. However, Air Products is 1.43 times more volatile than Sumitomo Chemical. It trades about 0.17 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.11 per unit of risk. If you would invest 29,550 in Air Products and on August 29, 2024 and sell it today you would earn a total of 2,120 from holding Air Products and or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Sumitomo Chemical
Performance |
| Timeline |
| Air Products |
| Sumitomo Chemical |
Air Products and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Sumitomo Chemical
The main advantage of trading using opposite Air Products and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Natural Health Trends | Air Products vs. Bausch Health Companies | Air Products vs. Harmony Gold Mining | Air Products vs. GRUPO CARSO A1 |
| Sumitomo Chemical vs. Superior Plus Corp | Sumitomo Chemical vs. NMI Holdings | Sumitomo Chemical vs. Origin Agritech | Sumitomo Chemical vs. SIVERS SEMICONDUCTORS AB |
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 Stocks Directory module to find actively traded stocks across global markets.
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