Correlation Between Agricultural Bank and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank 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 Agricultural Bank and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank of and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on Agricultural Bank 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 Agricultural Bank with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Sumitomo Mitsui.
Diversification Opportunities for Agricultural Bank and Sumitomo Mitsui
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Agricultural and Sumitomo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of 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 Agricultural Bank 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 Agricultural Bank of 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 Agricultural Bank i.e., Agricultural Bank and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Agricultural Bank and Sumitomo Mitsui
Assuming the 90 days horizon Agricultural Bank of is expected to generate 2.77 times more return on investment than Sumitomo Mitsui. However, Agricultural Bank is 2.77 times more volatile than Sumitomo Mitsui Construction. It trades about 0.2 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about 0.22 per unit of risk. If you would invest 40.00 in Agricultural Bank of on September 5, 2024 and sell it today you would earn a total of 10.00 from holding Agricultural Bank of or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Agricultural Bank of vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| Agricultural Bank |
| Sumitomo Mitsui Cons |
Agricultural Bank and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agricultural Bank and Sumitomo Mitsui
The main advantage of trading using opposite Agricultural Bank and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank 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.| Agricultural Bank vs. Sumitomo Mitsui Construction | Agricultural Bank vs. Titan Machinery | Agricultural Bank vs. Nufarm Limited | Agricultural Bank vs. AUST AGRICULTURAL |
| Sumitomo Mitsui vs. TOTAL GABON | Sumitomo Mitsui vs. Walgreens Boots Alliance | Sumitomo Mitsui vs. Peak Resources Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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