Correlation Between Sumitomo Mitsui and GX AI
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and GX AI 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 GX AI 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 GX AI TECH, you can compare the effects of market volatilities on Sumitomo Mitsui and GX AI 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 GX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and GX AI.
Diversification Opportunities for Sumitomo Mitsui and GX AI
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sumitomo and BAIQ39 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and GX AI TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GX AI TECH 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 GX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GX AI TECH has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and GX AI go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and GX AI
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.46 times more return on investment than GX AI. However, Sumitomo Mitsui is 1.46 times more volatile than GX AI TECH. It trades about 0.11 of its potential returns per unit of risk. GX AI TECH is currently generating about 0.13 per unit of risk. If you would invest 6,800 in Sumitomo Mitsui Financial on September 19, 2024 and sell it today you would earn a total of 2,227 from holding Sumitomo Mitsui Financial or generate 32.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.75% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. GX AI TECH
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| GX AI TECH |
Sumitomo Mitsui and GX AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and GX AI
The main advantage of trading using opposite Sumitomo Mitsui and GX AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, GX AI 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 GX AI will offset losses from the drop in GX AI's long position.| Sumitomo Mitsui vs. Banco Santander SA | Sumitomo Mitsui vs. BTG Pactual Logstica | Sumitomo Mitsui vs. Plano Plano Desenvolvimento | Sumitomo Mitsui vs. Cable One |
| GX AI vs. GP Investments | GX AI vs. United States Steel | GX AI vs. Paycom Software | GX AI vs. MAHLE Metal Leve |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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