Correlation Between Sumitomo Mitsui and Gensource Potash
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Gensource Potash 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 Gensource Potash 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 Gensource Potash, you can compare the effects of market volatilities on Sumitomo Mitsui and Gensource Potash 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 Gensource Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Gensource Potash.
Diversification Opportunities for Sumitomo Mitsui and Gensource Potash
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sumitomo and Gensource is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Gensource Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensource Potash 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 Gensource Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensource Potash has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Gensource Potash go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Gensource Potash
Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 9.13 times less return on investment than Gensource Potash. But when comparing it to its historical volatility, Sumitomo Mitsui Financial is 9.44 times less risky than Gensource Potash. It trades about 0.13 of its potential returns per unit of risk. Gensource Potash is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Gensource Potash on September 1, 2024 and sell it today you would lose (2.00) from holding Gensource Potash or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Gensource Potash
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Gensource Potash |
Sumitomo Mitsui and Gensource Potash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Gensource Potash
The main advantage of trading using opposite Sumitomo Mitsui and Gensource Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Gensource Potash 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 Gensource Potash will offset losses from the drop in Gensource Potash's long position.| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. HSBC Holdings PLC | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. Citigroup |
| Gensource Potash vs. South32 Limited | Gensource Potash vs. NioCorp Developments Ltd | Gensource Potash vs. HUMANA INC | Gensource Potash 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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