Correlation Between Lomiko Metals and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Lomiko Metals 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 Lomiko Metals and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lomiko Metals and Sumitomo Metal Mining, you can compare the effects of market volatilities on Lomiko Metals 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 Lomiko Metals with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lomiko Metals and Sumitomo Metal.
Diversification Opportunities for Lomiko Metals and Sumitomo Metal
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lomiko and Sumitomo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lomiko Metals 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 Lomiko Metals 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 Lomiko Metals 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 Lomiko Metals i.e., Lomiko Metals and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Lomiko Metals and Sumitomo Metal
Assuming the 90 days horizon Lomiko Metals is expected to generate 80.45 times more return on investment than Sumitomo Metal. However, Lomiko Metals is 80.45 times more volatile than Sumitomo Metal Mining. It trades about 0.17 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.05 per unit of risk. If you would invest 19.00 in Lomiko Metals on September 25, 2024 and sell it today you would lose (9.60) from holding Lomiko Metals or give up 50.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lomiko Metals vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Lomiko Metals |
| Sumitomo Metal Mining |
Lomiko Metals and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lomiko Metals and Sumitomo Metal
The main advantage of trading using opposite Lomiko Metals and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lomiko Metals 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.| Lomiko Metals vs. Altair International Corp | Lomiko Metals vs. Global Battery Metals | Lomiko Metals vs. Jourdan Resources |
| Sumitomo Metal vs. Altair International Corp | Sumitomo Metal vs. Global Battery Metals | Sumitomo Metal vs. Jourdan Resources | Sumitomo Metal vs. Lomiko 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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