Correlation Between Sumitomo Mitsui and Astra International
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Astra 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 Astra 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 Astra International Tbk, you can compare the effects of market volatilities on Sumitomo Mitsui and Astra 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 Astra International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Astra International.
Diversification Opportunities for Sumitomo Mitsui and Astra International
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Astra is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Astra International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra International Tbk 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 Astra International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra International Tbk has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Astra International go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Astra International
Assuming the 90 days horizon Sumitomo Mitsui Financial is expected to under-perform the Astra International. In addition to that, Sumitomo Mitsui is 3.62 times more volatile than Astra International Tbk. It trades about -0.03 of its total potential returns per unit of risk. Astra International Tbk is currently generating about -0.05 per unit of volatility. If you would invest 594.00 in Astra International Tbk on November 9, 2024 and sell it today you would lose (12.00) from holding Astra International Tbk or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Astra International Tbk
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Astra International Tbk |
Sumitomo Mitsui and Astra International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Astra International
The main advantage of trading using opposite Sumitomo Mitsui and Astra International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Astra 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 Astra International will offset losses from the drop in Astra International'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 |
| Astra International vs. Allison Transmission Holdings | Astra International vs. Luminar Technologies | Astra International vs. Lear Corporation | Astra International vs. BorgWarner |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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