Correlation Between Qantas Airways and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Qantas Airways and Sumitomo Mitsui 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 Qantas Airways and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qantas Airways Limited and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on Qantas Airways and Sumitomo Mitsui 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 Qantas Airways with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and Sumitomo Mitsui.
Diversification Opportunities for Qantas Airways and Sumitomo Mitsui
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Qantas and Sumitomo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Limited and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons and Qantas Airways 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 Qantas Airways Limited are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of Qantas Airways i.e., Qantas Airways and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Qantas Airways and Sumitomo Mitsui
Assuming the 90 days horizon Qantas Airways Limited is expected to generate 0.91 times more return on investment than Sumitomo Mitsui. However, Qantas Airways Limited is 1.1 times less risky than Sumitomo Mitsui. It trades about 0.34 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about -0.01 per unit of risk. If you would invest 490.00 in Qantas Airways Limited on August 26, 2024 and sell it today you would earn a total of 63.00 from holding Qantas Airways Limited or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qantas Airways Limited vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| Qantas Airways |
| Sumitomo Mitsui Cons |
Qantas Airways and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and Sumitomo Mitsui
The main advantage of trading using opposite Qantas Airways and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways position performs unexpectedly, Sumitomo Mitsui 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 Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Qantas Airways vs. Sumitomo Mitsui Construction | Qantas Airways vs. Gol Intelligent Airlines | Qantas Airways vs. H FARM SPA | Qantas Airways vs. Titan Machinery |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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