Correlation Between SCANDMEDICAL SOLDK-040 and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both SCANDMEDICAL SOLDK-040 and Sumitomo Chemical 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 SCANDMEDICAL SOLDK-040 and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANDMEDICAL SOLDK 040 and Sumitomo Chemical, you can compare the effects of market volatilities on SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040 with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANDMEDICAL SOLDK-040 and Sumitomo Chemical.
Diversification Opportunities for SCANDMEDICAL SOLDK-040 and Sumitomo Chemical
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SCANDMEDICAL and Sumitomo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SCANDMEDICAL SOLDK 040 and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK 040 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 has no effect on the direction of SCANDMEDICAL SOLDK-040 i.e., SCANDMEDICAL SOLDK-040 and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between SCANDMEDICAL SOLDK-040 and Sumitomo Chemical
Assuming the 90 days horizon SCANDMEDICAL SOLDK 040 is expected to under-perform the Sumitomo Chemical. But the stock apears to be less risky and, when comparing its historical volatility, SCANDMEDICAL SOLDK 040 is 1.24 times less risky than Sumitomo Chemical. The stock trades about -0.03 of its potential returns per unit of risk. The Sumitomo Chemical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Sumitomo Chemical on September 2, 2024 and sell it today you would earn a total of 27.00 from holding Sumitomo Chemical or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANDMEDICAL SOLDK 040 vs. Sumitomo Chemical
Performance |
| Timeline |
| SCANDMEDICAL SOLDK 040 |
| Sumitomo Chemical |
SCANDMEDICAL SOLDK-040 and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANDMEDICAL SOLDK-040 and Sumitomo Chemical
The main advantage of trading using opposite SCANDMEDICAL SOLDK-040 and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANDMEDICAL SOLDK-040 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.| SCANDMEDICAL SOLDK-040 vs. MGIC INVESTMENT | SCANDMEDICAL SOLDK-040 vs. SLR Investment Corp | SCANDMEDICAL SOLDK-040 vs. Chuangs China Investments | SCANDMEDICAL SOLDK-040 vs. New Residential Investment |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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