Correlation Between GEELY AUTOMOBILE and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Sumitomo Rubber 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 GEELY AUTOMOBILE and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Sumitomo Rubber Industries, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Sumitomo Rubber 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 GEELY AUTOMOBILE with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Sumitomo Rubber.
Diversification Opportunities for GEELY AUTOMOBILE and Sumitomo Rubber
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEELY and Sumitomo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Sumitomo Rubber
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.15 times more return on investment than Sumitomo Rubber. However, GEELY AUTOMOBILE is 1.15 times more volatile than Sumitomo Rubber Industries. It trades about 0.1 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.01 per unit of risk. If you would invest 88.00 in GEELY AUTOMOBILE on September 4, 2024 and sell it today you would earn a total of 86.00 from holding GEELY AUTOMOBILE or generate 97.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| Sumitomo Rubber Indu |
GEELY AUTOMOBILE and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Sumitomo Rubber
The main advantage of trading using opposite GEELY AUTOMOBILE and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, Sumitomo Rubber 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 Rubber will offset losses from the drop in Sumitomo Rubber's long position.| GEELY AUTOMOBILE vs. Transport International Holdings | GEELY AUTOMOBILE vs. BROADWIND ENRGY | GEELY AUTOMOBILE vs. SEKISUI CHEMICAL | GEELY AUTOMOBILE vs. Gaztransport Technigaz SA |
| Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Essentra plc | Sumitomo Rubber vs. Semperit Aktiengesellschaft Holding | Sumitomo Rubber vs. PT Gajah Tunggal |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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