Correlation Between Radian and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Radian and Sumitomo Rubber 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 Radian and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radian Group and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Radian and Sumitomo Rubber 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 Radian with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radian and Sumitomo Rubber.
Diversification Opportunities for Radian and Sumitomo Rubber
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Radian and Sumitomo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Radian Group and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and Radian 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 Radian Group are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of Radian i.e., Radian and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Radian and Sumitomo Rubber
Assuming the 90 days horizon Radian Group is expected to generate 1.32 times more return on investment than Sumitomo Rubber. However, Radian is 1.32 times more volatile than Sumitomo Rubber Industries. It trades about 0.17 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.05 per unit of risk. If you would invest 3,040 in Radian Group on October 20, 2024 and sell it today you would earn a total of 140.00 from holding Radian Group or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Radian Group vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Radian Group |
| Sumitomo Rubber Indu |
Radian and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radian and Sumitomo Rubber
The main advantage of trading using opposite Radian and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radian position performs unexpectedly, Sumitomo Rubber 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 Rubber will offset losses from the drop in Sumitomo Rubber's long position.| Radian vs. Sumitomo Rubber Industries | Radian vs. APPLIED MATERIALS | Radian vs. VIENNA INSURANCE GR | Radian vs. Applied Materials |
| Sumitomo Rubber vs. Datang International Power | Sumitomo Rubber vs. DAIDO METAL TD | Sumitomo Rubber vs. MICRONIC MYDATA | Sumitomo Rubber vs. ANTA SPORTS PRODUCT |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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