Correlation Between Industrial Investment and Sumitomo Chemical
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By analyzing existing cross correlation between Industrial Investment Trust and Sumitomo Chemical India, you can compare the effects of market volatilities on Industrial Investment 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 Industrial Investment with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Sumitomo Chemical.
Diversification Opportunities for Industrial Investment and Sumitomo Chemical
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and Sumitomo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Sumitomo Chemical India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical India and Industrial Investment 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 Industrial Investment Trust 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 India has no effect on the direction of Industrial Investment i.e., Industrial Investment and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between Industrial Investment and Sumitomo Chemical
Assuming the 90 days trading horizon Industrial Investment Trust is expected to under-perform the Sumitomo Chemical. In addition to that, Industrial Investment is 1.55 times more volatile than Sumitomo Chemical India. It trades about -0.41 of its total potential returns per unit of risk. Sumitomo Chemical India is currently generating about -0.16 per unit of volatility. If you would invest 53,425 in Sumitomo Chemical India on October 12, 2024 and sell it today you would lose (3,600) from holding Sumitomo Chemical India or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Investment Trust vs. Sumitomo Chemical India
Performance |
| Timeline |
| Industrial Investment |
| Sumitomo Chemical India |
Industrial Investment and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Investment and Sumitomo Chemical
The main advantage of trading using opposite Industrial Investment and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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.The idea behind Industrial Investment Trust and Sumitomo Chemical India pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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