Correlation Between Sumitomo Chemical and NORDHEALTH
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and NORDHEALTH 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 Chemical and NORDHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and NORDHEALTH AS NK, you can compare the effects of market volatilities on Sumitomo Chemical and NORDHEALTH 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 Chemical with a short position of NORDHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and NORDHEALTH.
Diversification Opportunities for Sumitomo Chemical and NORDHEALTH
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and NORDHEALTH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and NORDHEALTH AS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDHEALTH AS NK and Sumitomo Chemical 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 Chemical are associated (or correlated) with NORDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDHEALTH AS NK has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and NORDHEALTH go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and NORDHEALTH
Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the NORDHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Chemical is 1.63 times less risky than NORDHEALTH. The stock trades about -0.07 of its potential returns per unit of risk. The NORDHEALTH AS NK is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 288.00 in NORDHEALTH AS NK on August 28, 2024 and sell it today you would earn a total of 19.00 from holding NORDHEALTH AS NK or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical vs. NORDHEALTH AS NK
Performance |
| Timeline |
| Sumitomo Chemical |
| NORDHEALTH AS NK |
Sumitomo Chemical and NORDHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and NORDHEALTH
The main advantage of trading using opposite Sumitomo Chemical and NORDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, NORDHEALTH 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 NORDHEALTH will offset losses from the drop in NORDHEALTH's long position.| Sumitomo Chemical vs. Superior Plus Corp | Sumitomo Chemical vs. NMI Holdings | Sumitomo Chemical vs. Origin Agritech | Sumitomo Chemical vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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