Correlation Between MeVis Medical and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both MeVis Medical 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 MeVis Medical and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeVis Medical Solutions and Sumitomo Chemical, you can compare the effects of market volatilities on MeVis Medical 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 MeVis Medical with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and Sumitomo Chemical.
Diversification Opportunities for MeVis Medical and Sumitomo Chemical
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MeVis and Sumitomo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and MeVis Medical 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 MeVis Medical Solutions 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 MeVis Medical i.e., MeVis Medical and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between MeVis Medical and Sumitomo Chemical
Assuming the 90 days trading horizon MeVis Medical Solutions is expected to under-perform the Sumitomo Chemical. But the stock apears to be less risky and, when comparing its historical volatility, MeVis Medical Solutions is 3.15 times less risky than Sumitomo Chemical. The stock trades about -0.05 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MeVis Medical Solutions vs. Sumitomo Chemical
Performance |
| Timeline |
| MeVis Medical Solutions |
| Sumitomo Chemical |
MeVis Medical and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeVis Medical and Sumitomo Chemical
The main advantage of trading using opposite MeVis Medical and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical 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.| MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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