Correlation Between Sumitomo Mitsui and Altair International
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Altair International 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 Altair International 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 Altair International Corp, you can compare the effects of market volatilities on Sumitomo Mitsui and Altair International 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 Altair International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Altair International.
Diversification Opportunities for Sumitomo Mitsui and Altair International
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sumitomo and Altair is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Altair International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair International Corp 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 Altair International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair International Corp has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Altair International go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Altair International
Given the investment horizon of 90 days Sumitomo Mitsui is expected to generate 3.18 times less return on investment than Altair International. But when comparing it to its historical volatility, Sumitomo Mitsui Financial is 11.22 times less risky than Altair International. It trades about 0.13 of its potential returns per unit of risk. Altair International Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Altair International Corp on October 23, 2024 and sell it today you would lose (0.50) from holding Altair International Corp or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Altair International Corp
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Altair International Corp |
Sumitomo Mitsui and Altair International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Altair International
The main advantage of trading using opposite Sumitomo Mitsui and Altair International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Altair International 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 Altair International will offset losses from the drop in Altair International's long position.| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
| Altair International vs. Atco Mining | Altair International vs. Bitterroot Resources | Altair International vs. Avarone Metals | Altair International vs. Huntsman Exploration |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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