Correlation Between Marubeni and Sumitomo
Can any of the company-specific risk be diversified away by investing in both Marubeni and Sumitomo 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 Marubeni and Sumitomo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marubeni and Sumitomo, you can compare the effects of market volatilities on Marubeni and Sumitomo 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 Marubeni with a short position of Sumitomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marubeni and Sumitomo.
Diversification Opportunities for Marubeni and Sumitomo
Poor diversification
The 3 months correlation between Marubeni and Sumitomo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo and Marubeni 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 Marubeni are associated (or correlated) with Sumitomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo has no effect on the direction of Marubeni i.e., Marubeni and Sumitomo go up and down completely randomly.
Pair Corralation between Marubeni and Sumitomo
Assuming the 90 days trading horizon Marubeni is expected to generate 19.9 times less return on investment than Sumitomo. But when comparing it to its historical volatility, Marubeni is 1.38 times less risky than Sumitomo. It trades about 0.0 of its potential returns per unit of risk. Sumitomo is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,938 in Sumitomo on August 29, 2024 and sell it today you would earn a total of 29.00 from holding Sumitomo or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marubeni vs. Sumitomo
Performance |
| Timeline |
| Marubeni |
| Sumitomo |
Marubeni and Sumitomo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marubeni and Sumitomo
The main advantage of trading using opposite Marubeni and Sumitomo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marubeni position performs unexpectedly, Sumitomo 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 will offset losses from the drop in Sumitomo's long position.| Marubeni vs. Superior Plus Corp | Marubeni vs. NMI Holdings | Marubeni vs. Origin Agritech | Marubeni vs. SIVERS SEMICONDUCTORS AB |
| Sumitomo vs. CeoTronics AG | Sumitomo vs. United Insurance Holdings | Sumitomo vs. CODERE ONLINE LUX | Sumitomo vs. CARSALESCOM |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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