Correlation Between Sumitomo Chemical and AXMIN
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and AXMIN 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 AXMIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and AXMIN Inc, you can compare the effects of market volatilities on Sumitomo Chemical and AXMIN 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 AXMIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and AXMIN.
Diversification Opportunities for Sumitomo Chemical and AXMIN
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and AXMIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and AXMIN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXMIN Inc 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 AXMIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXMIN Inc has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and AXMIN go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and AXMIN
Assuming the 90 days horizon Sumitomo Chemical is expected to generate 26.78 times less return on investment than AXMIN. But when comparing it to its historical volatility, Sumitomo Chemical is 1.87 times less risky than AXMIN. It trades about 0.0 of its potential returns per unit of risk. AXMIN Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.40 in AXMIN Inc on September 2, 2024 and sell it today you would lose (0.15) from holding AXMIN Inc or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sumitomo Chemical vs. AXMIN Inc
Performance |
| Timeline |
| Sumitomo Chemical |
| AXMIN Inc |
Sumitomo Chemical and AXMIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and AXMIN
The main advantage of trading using opposite Sumitomo Chemical and AXMIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, AXMIN 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 AXMIN will offset losses from the drop in AXMIN's long position.The idea behind Sumitomo Chemical and AXMIN Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AXMIN vs. Collins Foods Limited | AXMIN vs. Rogers Communications | AXMIN vs. Entravision Communications | AXMIN vs. Performance Food Group |
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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