Correlation Between Orexo AB and Sumitomo Dainippon
Can any of the company-specific risk be diversified away by investing in both Orexo AB and Sumitomo Dainippon 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 Orexo AB and Sumitomo Dainippon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orexo AB and Sumitomo Dainippon Pharma, you can compare the effects of market volatilities on Orexo AB and Sumitomo Dainippon 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 Orexo AB with a short position of Sumitomo Dainippon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orexo AB and Sumitomo Dainippon.
Diversification Opportunities for Orexo AB and Sumitomo Dainippon
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Orexo and Sumitomo is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orexo AB and Sumitomo Dainippon Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Dainippon Pharma and Orexo AB 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 Orexo AB are associated (or correlated) with Sumitomo Dainippon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Dainippon Pharma has no effect on the direction of Orexo AB i.e., Orexo AB and Sumitomo Dainippon go up and down completely randomly.
Pair Corralation between Orexo AB and Sumitomo Dainippon
Assuming the 90 days horizon Orexo AB is expected to generate 2.0 times more return on investment than Sumitomo Dainippon. However, Orexo AB is 2.0 times more volatile than Sumitomo Dainippon Pharma. It trades about 0.02 of its potential returns per unit of risk. Sumitomo Dainippon Pharma is currently generating about -0.58 per unit of risk. If you would invest 104.00 in Orexo AB on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Orexo AB or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Orexo AB vs. Sumitomo Dainippon Pharma
Performance |
| Timeline |
| Orexo AB |
| Sumitomo Dainippon Pharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Orexo AB and Sumitomo Dainippon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orexo AB and Sumitomo Dainippon
The main advantage of trading using opposite Orexo AB and Sumitomo Dainippon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orexo AB position performs unexpectedly, Sumitomo Dainippon 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 Dainippon will offset losses from the drop in Sumitomo Dainippon's long position.| Orexo AB vs. Genomma Lab Internacional | Orexo AB vs. Hypera SA | Orexo AB vs. Elanco Animal Health | Orexo AB vs. SIGA Technologies |
| Sumitomo Dainippon vs. Hypera SA | Sumitomo Dainippon vs. YourWay Cannabis Brands | Sumitomo Dainippon vs. Cumberland Pharmaceuticals | Sumitomo Dainippon vs. Genomma Lab Internacional |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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