Correlation Between Oceanic Iron and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Oceanic Iron 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 Oceanic Iron and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanic Iron Ore and Sumitomo Metal Mining, you can compare the effects of market volatilities on Oceanic Iron 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 Oceanic Iron with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Iron and Sumitomo Metal.
Diversification Opportunities for Oceanic Iron and Sumitomo Metal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Oceanic and Sumitomo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Iron Ore 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 Oceanic Iron 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 Oceanic Iron Ore 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 Oceanic Iron i.e., Oceanic Iron and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Oceanic Iron and Sumitomo Metal
Assuming the 90 days horizon Oceanic Iron Ore is expected to generate 1.89 times more return on investment than Sumitomo Metal. However, Oceanic Iron is 1.89 times more volatile than Sumitomo Metal Mining. It trades about 0.04 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.04 per unit of risk. If you would invest 6.00 in Oceanic Iron Ore on September 20, 2024 and sell it today you would earn a total of 1.00 from holding Oceanic Iron Ore or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 82.26% |
| Values | Daily Returns |
Oceanic Iron Ore vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Oceanic Iron Ore |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sumitomo Metal Mining |
Oceanic Iron and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanic Iron and Sumitomo Metal
The main advantage of trading using opposite Oceanic Iron and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Iron 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.| Oceanic Iron vs. Avarone Metals | Oceanic Iron vs. Aurelia Metals Limited | Oceanic Iron vs. Adriatic Metals PLC | Oceanic Iron vs. Huntsman Exploration |
| Sumitomo Metal vs. IGO Limited | Sumitomo Metal vs. Focus Graphite | Sumitomo Metal vs. Anson Resources Limited | Sumitomo Metal vs. Avarone Metals |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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