Correlation Between Sumitomo Chemical and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and China BlueChemical 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 China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and China BlueChemical, you can compare the effects of market volatilities on Sumitomo Chemical and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and China BlueChemical.
Diversification Opportunities for Sumitomo Chemical and China BlueChemical
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and China BlueChemical go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and China BlueChemical
Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the China BlueChemical. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Chemical is 2.81 times less risky than China BlueChemical. The stock trades about -0.27 of its potential returns per unit of risk. The China BlueChemical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 23.00 in China BlueChemical on August 30, 2024 and sell it today you would earn a total of 2.00 from holding China BlueChemical or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical vs. China BlueChemical
Performance |
| Timeline |
| Sumitomo Chemical |
| China BlueChemical |
Sumitomo Chemical and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and China BlueChemical
The main advantage of trading using opposite Sumitomo Chemical and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| Sumitomo Chemical vs. Westinghouse Air Brake | Sumitomo Chemical vs. Alaska Air Group | Sumitomo Chemical vs. NORWEGIAN AIR SHUT | Sumitomo Chemical vs. SEALED AIR |
| China BlueChemical vs. Computer And Technologies | China BlueChemical vs. SCOTT TECHNOLOGY | China BlueChemical vs. Eagle Materials | China BlueChemical vs. DXC Technology Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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