Correlation Between Sumitomo Chemical and Adecco
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Adecco 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 Adecco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical Co and Adecco Group, you can compare the effects of market volatilities on Sumitomo Chemical and Adecco 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 Adecco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Adecco.
Diversification Opportunities for Sumitomo Chemical and Adecco
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sumitomo and Adecco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical Co and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco 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 Co are associated (or correlated) with Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Adecco go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Adecco
Assuming the 90 days horizon Sumitomo Chemical Co is expected to generate 0.78 times more return on investment than Adecco. However, Sumitomo Chemical Co is 1.28 times less risky than Adecco. It trades about -0.18 of its potential returns per unit of risk. Adecco Group is currently generating about -0.35 per unit of risk. If you would invest 1,282 in Sumitomo Chemical Co on September 2, 2024 and sell it today you would lose (77.00) from holding Sumitomo Chemical Co or give up 6.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical Co vs. Adecco Group
Performance |
| Timeline |
| Sumitomo Chemical |
| Adecco Group |
Sumitomo Chemical and Adecco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Adecco
The main advantage of trading using opposite Sumitomo Chemical and Adecco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Adecco 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 Adecco will offset losses from the drop in Adecco's long position.| Sumitomo Chemical vs. BASF SE NA | Sumitomo Chemical vs. Braskem SA Class | Sumitomo Chemical vs. Lsb Industries | Sumitomo Chemical vs. Dow Inc |
| Adecco vs. The Caldwell Partners | Adecco vs. Futuris Company | Adecco vs. Kelly Services A | Adecco vs. Heidrick Struggles International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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