Correlation Between NH HOTEL and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both NH HOTEL 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 NH HOTEL and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH HOTEL GROUP and Sumitomo Chemical, you can compare the effects of market volatilities on NH HOTEL 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 NH HOTEL with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Sumitomo Chemical.
Diversification Opportunities for NH HOTEL and Sumitomo Chemical
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NH5 and Sumitomo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and NH HOTEL 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 NH HOTEL GROUP 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 NH HOTEL i.e., NH HOTEL and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between NH HOTEL and Sumitomo Chemical
Assuming the 90 days trading horizon NH HOTEL is expected to generate 44.41 times less return on investment than Sumitomo Chemical. But when comparing it to its historical volatility, NH HOTEL GROUP is 4.78 times less risky than Sumitomo Chemical. It trades about 0.01 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Sumitomo Chemical on December 1, 2024 and sell it today you would earn a total of 18.00 from holding Sumitomo Chemical or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Sumitomo Chemical
Performance |
| Timeline |
| NH HOTEL GROUP |
| Sumitomo Chemical |
NH HOTEL and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Sumitomo Chemical
The main advantage of trading using opposite NH HOTEL and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL 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.| NH HOTEL vs. CARSALESCOM | NH HOTEL vs. ON Semiconductor | NH HOTEL vs. COMM HEALTH SYSTEMS | NH HOTEL vs. Acadia Healthcare Co |
| Sumitomo Chemical vs. ALBIS LEASING AG | Sumitomo Chemical vs. Sixt Leasing SE | Sumitomo Chemical vs. Apollo Investment Corp | Sumitomo Chemical vs. Global Ship Lease |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |