Correlation Between Sumitomo Chemical and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and NH HOTEL 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 NH HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and NH HOTEL GROUP, you can compare the effects of market volatilities on Sumitomo Chemical and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and NH HOTEL.
Diversification Opportunities for Sumitomo Chemical and NH HOTEL
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and NH5 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and NH HOTEL go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and NH HOTEL
Assuming the 90 days horizon Sumitomo Chemical is expected to generate 4.78 times more return on investment than NH HOTEL. However, Sumitomo Chemical is 4.78 times more volatile than NH HOTEL GROUP. It trades about 0.12 of its potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.01 per unit of risk. If you would invest 196.00 in Sumitomo Chemical on December 1, 2024 and sell it today you would earn a total of 18.00 from holding Sumitomo Chemical or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical vs. NH HOTEL GROUP
Performance |
| Timeline |
| Sumitomo Chemical |
| NH HOTEL GROUP |
Sumitomo Chemical and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and NH HOTEL
The main advantage of trading using opposite Sumitomo Chemical and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, NH HOTEL 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 NH HOTEL will offset losses from the drop in NH HOTEL's long position.| Sumitomo Chemical vs. ALBIS LEASING AG | Sumitomo Chemical vs. Sixt Leasing SE | Sumitomo Chemical vs. Apollo Investment Corp | Sumitomo Chemical vs. Global Ship Lease |
| NH HOTEL vs. CARSALESCOM | NH HOTEL vs. ON Semiconductor | NH HOTEL vs. COMM HEALTH SYSTEMS | NH HOTEL vs. Acadia Healthcare 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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