Correlation Between Sumitomo Mitsui and Bahema Educao
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Bahema Educao 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 Sumitomo Mitsui and Bahema Educao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Bahema Educao SA, you can compare the effects of market volatilities on Sumitomo Mitsui and Bahema Educao 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 Sumitomo Mitsui with a short position of Bahema Educao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Bahema Educao.
Diversification Opportunities for Sumitomo Mitsui and Bahema Educao
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Bahema is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Bahema Educao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bahema Educao SA and Sumitomo Mitsui 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 Sumitomo Mitsui Financial are associated (or correlated) with Bahema Educao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bahema Educao SA has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Bahema Educao go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Bahema Educao
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.48 times more return on investment than Bahema Educao. However, Sumitomo Mitsui Financial is 2.09 times less risky than Bahema Educao. It trades about 0.01 of its potential returns per unit of risk. Bahema Educao SA is currently generating about -0.11 per unit of risk. If you would invest 8,972 in Sumitomo Mitsui Financial on November 1, 2024 and sell it today you would lose (10.00) from holding Sumitomo Mitsui Financial or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Bahema Educao SA
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Bahema Educao SA |
Sumitomo Mitsui and Bahema Educao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Bahema Educao
The main advantage of trading using opposite Sumitomo Mitsui and Bahema Educao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Bahema Educao 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 Bahema Educao will offset losses from the drop in Bahema Educao's long position.| Sumitomo Mitsui vs. Zebra Technologies | Sumitomo Mitsui vs. Check Point Software | Sumitomo Mitsui vs. Waste Management | Sumitomo Mitsui vs. Align Technology |
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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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