Correlation Between Global Battery and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Global Battery 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 Global Battery and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Battery Metals and Sumitomo Metal Mining, you can compare the effects of market volatilities on Global Battery 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 Global Battery with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Battery and Sumitomo Metal.
Diversification Opportunities for Global Battery and Sumitomo Metal
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Sumitomo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Battery 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 Global Battery 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 Global Battery 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 Global Battery i.e., Global Battery and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Global Battery and Sumitomo Metal
Assuming the 90 days horizon Global Battery Metals is expected to generate 11.2 times more return on investment than Sumitomo Metal. However, Global Battery is 11.2 times more volatile than Sumitomo Metal Mining. It trades about 0.01 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.32 per unit of risk. If you would invest 1.75 in Global Battery Metals on September 25, 2024 and sell it today you would lose (0.35) from holding Global Battery Metals or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global Battery Metals vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Global Battery Metals |
| Sumitomo Metal Mining |
Global Battery and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Battery and Sumitomo Metal
The main advantage of trading using opposite Global Battery and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Battery 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.| Global Battery vs. Puma Exploration | Global Battery vs. Sixty North Gold | Global Battery vs. Red Pine Exploration | Global Battery vs. Altamira Gold Corp |
| Sumitomo Metal vs. Altair International Corp | Sumitomo Metal vs. Global Battery Metals | Sumitomo Metal vs. Jourdan Resources | Sumitomo Metal vs. Lomiko Metals |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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