Correlation Between Boliden AB and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Boliden AB 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 Boliden AB and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boliden AB ADR and Sumitomo Metal Mining, you can compare the effects of market volatilities on Boliden AB 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 Boliden AB with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Sumitomo Metal.
Diversification Opportunities for Boliden AB and Sumitomo Metal
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Boliden and Sumitomo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB ADR 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 Boliden AB 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 Boliden AB ADR 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 Boliden AB i.e., Boliden AB and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Boliden AB and Sumitomo Metal
Assuming the 90 days horizon Boliden AB ADR is expected to generate 0.97 times more return on investment than Sumitomo Metal. However, Boliden AB ADR is 1.03 times less risky than Sumitomo Metal. It trades about -0.12 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.21 per unit of risk. If you would invest 6,757 in Boliden AB ADR on August 30, 2024 and sell it today you would lose (822.00) from holding Boliden AB ADR or give up 12.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boliden AB ADR vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Boliden AB ADR |
| Sumitomo Metal Mining |
Boliden AB and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boliden AB and Sumitomo Metal
The main advantage of trading using opposite Boliden AB and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB 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.| Boliden AB vs. Rockridge Resources | Boliden AB vs. Ameriwest Lithium | Boliden AB vs. Osisko Metals Incorporated | Boliden AB vs. Volt Lithium Corp |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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