Correlation Between Sumitomo Mitsui and Monarch Cement
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Monarch Cement 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 Monarch Cement 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 The Monarch Cement, you can compare the effects of market volatilities on Sumitomo Mitsui and Monarch Cement 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 Monarch Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Monarch Cement.
Diversification Opportunities for Sumitomo Mitsui and Monarch Cement
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Monarch is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and The Monarch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Cement 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 Monarch Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Cement has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Monarch Cement go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Monarch Cement
Given the investment horizon of 90 days Sumitomo Mitsui is expected to generate 1.16 times less return on investment than Monarch Cement. But when comparing it to its historical volatility, Sumitomo Mitsui Financial is 1.68 times less risky than Monarch Cement. It trades about 0.28 of its potential returns per unit of risk. The Monarch Cement is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 19,450 in The Monarch Cement on August 31, 2024 and sell it today you would earn a total of 2,399 from holding The Monarch Cement or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. The Monarch Cement
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Monarch Cement |
Sumitomo Mitsui and Monarch Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Monarch Cement
The main advantage of trading using opposite Sumitomo Mitsui and Monarch Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Monarch Cement 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 Monarch Cement will offset losses from the drop in Monarch Cement'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 |
| Monarch Cement vs. South32 Limited | Monarch Cement vs. NioCorp Developments Ltd | Monarch Cement vs. HUMANA INC | Monarch Cement vs. SCOR PK |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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