Correlation Between Sumitomo Electric and Toray Industries
Can any of the company-specific risk be diversified away by investing in both Sumitomo Electric and Toray Industries 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 Electric and Toray Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Electric Industries and Toray Industries, you can compare the effects of market volatilities on Sumitomo Electric and Toray Industries 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 Electric with a short position of Toray Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Electric and Toray Industries.
Diversification Opportunities for Sumitomo Electric and Toray Industries
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Toray is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Electric Industries and Toray Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Industries and Sumitomo Electric 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 Electric Industries are associated (or correlated) with Toray Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toray Industries has no effect on the direction of Sumitomo Electric i.e., Sumitomo Electric and Toray Industries go up and down completely randomly.
Pair Corralation between Sumitomo Electric and Toray Industries
Assuming the 90 days horizon Sumitomo Electric Industries is expected to generate 4.77 times more return on investment than Toray Industries. However, Sumitomo Electric is 4.77 times more volatile than Toray Industries. It trades about 0.12 of its potential returns per unit of risk. Toray Industries is currently generating about 0.16 per unit of risk. If you would invest 1,759 in Sumitomo Electric Industries on November 9, 2024 and sell it today you would earn a total of 149.00 from holding Sumitomo Electric Industries or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Electric Industries vs. Toray Industries
Performance |
| Timeline |
| Sumitomo Electric |
| Toray Industries |
Sumitomo Electric and Toray Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Electric and Toray Industries
The main advantage of trading using opposite Sumitomo Electric and Toray Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Electric position performs unexpectedly, Toray Industries 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 Toray Industries will offset losses from the drop in Toray Industries' long position.| Sumitomo Electric vs. American Axle Manufacturing | Sumitomo Electric vs. Lear Corporation | Sumitomo Electric vs. Commercial Vehicle Group | Sumitomo Electric vs. Adient PLC |
| Toray Industries vs. Unifi Inc | Toray Industries vs. Albany International | Toray Industries vs. Toray Industries ADR | Toray Industries vs. Sumitomo Electric Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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