Correlation Between Cosan SA and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Cosan SA 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 Cosan SA and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosan SA and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Cosan SA 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 Cosan SA with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and Sumitomo Mitsui.
Diversification Opportunities for Cosan SA and Sumitomo Mitsui
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cosan and Sumitomo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial and Cosan SA 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 Cosan SA 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 Financial has no effect on the direction of Cosan SA i.e., Cosan SA and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Cosan SA and Sumitomo Mitsui
Assuming the 90 days trading horizon Cosan SA is expected to under-perform the Sumitomo Mitsui. In addition to that, Cosan SA is 1.94 times more volatile than Sumitomo Mitsui Financial. It trades about -0.25 of its total potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.38 per unit of volatility. If you would invest 7,432 in Sumitomo Mitsui Financial on September 3, 2024 and sell it today you would earn a total of 980.00 from holding Sumitomo Mitsui Financial or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosan SA vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Cosan SA |
| Sumitomo Mitsui Financial |
Cosan SA and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosan SA and Sumitomo Mitsui
The main advantage of trading using opposite Cosan SA and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA 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.| Cosan SA vs. Braskem SA | Cosan SA vs. Cyrela Brazil Realty | Cosan SA vs. CCR SA | Cosan SA vs. Lojas Renner SA |
| Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. Fundo Investimento Imobiliario | Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Western Digital |
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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