Correlation Between Japan Asia and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Japan Asia 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 Japan Asia and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Japan Asia 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 Japan Asia with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Sumitomo Rubber.
Diversification Opportunities for Japan Asia and Sumitomo Rubber
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and Sumitomo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment 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 Japan Asia 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 Japan Asia Investment 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 Japan Asia i.e., Japan Asia and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Japan Asia and Sumitomo Rubber
Assuming the 90 days horizon Japan Asia is expected to generate 2.12 times less return on investment than Sumitomo Rubber. But when comparing it to its historical volatility, Japan Asia Investment is 1.28 times less risky than Sumitomo Rubber. It trades about 0.19 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Sumitomo Rubber Industries on September 4, 2024 and sell it today you would earn a total of 120.00 from holding Sumitomo Rubber Industries or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Japan Asia Investment vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Japan Asia Investment |
| Sumitomo Rubber Indu |
Japan Asia and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Sumitomo Rubber
The main advantage of trading using opposite Japan Asia and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia 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.| Japan Asia vs. Blackstone Group | Japan Asia vs. BlackRock | Japan Asia vs. The Bank of | Japan Asia vs. Ameriprise Financial |
| Sumitomo Rubber vs. Zeon Corporation | 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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