Correlation Between Black Swan and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both Black Swan 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 Black Swan and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Swan Graphene and Sumitomo Chemical Co, you can compare the effects of market volatilities on Black Swan 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 Black Swan with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Swan and Sumitomo Chemical.
Diversification Opportunities for Black Swan and Sumitomo Chemical
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and Sumitomo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Black Swan Graphene and Sumitomo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and Black Swan 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 Black Swan Graphene 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 Black Swan i.e., Black Swan and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between Black Swan and Sumitomo Chemical
Assuming the 90 days horizon Black Swan Graphene is expected to under-perform the Sumitomo Chemical. In addition to that, Black Swan is 3.84 times more volatile than Sumitomo Chemical Co. It trades about -0.01 of its total potential returns per unit of risk. Sumitomo Chemical Co is currently generating about 0.07 per unit of volatility. If you would invest 1,030 in Sumitomo Chemical Co on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Sumitomo Chemical Co or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Black Swan Graphene vs. Sumitomo Chemical Co
Performance |
| Timeline |
| Black Swan Graphene |
| Sumitomo Chemical |
Black Swan and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Swan and Sumitomo Chemical
The main advantage of trading using opposite Black Swan and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Swan 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.| Black Swan vs. Altech Batteries Limited | Black Swan vs. Asahi Kaisei Corp | Black Swan vs. Flameret | Black Swan vs. Alumifuel Pwr Corp |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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