Correlation Between Pampa Metals and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Pampa 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 Pampa 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 Pampa Metals and Sumitomo Metal Mining, you can compare the effects of market volatilities on Pampa 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 Pampa Metals with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Metals and Sumitomo Metal.
Diversification Opportunities for Pampa Metals and Sumitomo Metal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pampa and Sumitomo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pampa 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 Pampa 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 Pampa 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 Pampa Metals i.e., Pampa Metals and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Pampa Metals and Sumitomo Metal
Assuming the 90 days horizon Pampa Metals is expected to generate 14.67 times more return on investment than Sumitomo Metal. However, Pampa Metals is 14.67 times more volatile than Sumitomo Metal Mining. It trades about 0.06 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.03 per unit of risk. If you would invest 31.00 in Pampa Metals on November 2, 2024 and sell it today you would lose (19.00) from holding Pampa Metals or give up 61.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 66.4% |
| Values | Daily Returns |
Pampa Metals vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Pampa Metals |
| Sumitomo Metal Mining |
Pampa Metals and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Metals and Sumitomo Metal
The main advantage of trading using opposite Pampa Metals and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa 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.| Pampa Metals vs. Surge Battery Metals | Pampa Metals vs. United Royale Holdings | Pampa Metals vs. Hillcrest Energy Technologies | Pampa Metals vs. Star Alliance International |
| Sumitomo Metal vs. Voltage Metals Corp | Sumitomo Metal vs. Tinka Resources Limited | Sumitomo Metal vs. Aldebaran Resources | Sumitomo Metal vs. Jindalee Resources Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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