Correlation Between Sumitomo Chemical and Black Swan
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Black Swan 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 Black Swan 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 Black Swan Graphene, you can compare the effects of market volatilities on Sumitomo Chemical and Black Swan 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 Black Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Black Swan.
Diversification Opportunities for Sumitomo Chemical and Black Swan
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Black is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical Co and Black Swan Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Swan Graphene 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 Black Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Swan Graphene has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Black Swan go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Black Swan
Assuming the 90 days horizon Sumitomo Chemical Co is expected to generate 0.26 times more return on investment than Black Swan. However, Sumitomo Chemical Co is 3.84 times less risky than Black Swan. It trades about 0.07 of its potential returns per unit of risk. Black Swan Graphene is currently generating about -0.01 per unit of risk. If you would invest 1,030 in Sumitomo Chemical Co on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Sumitomo Chemical Co or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Sumitomo Chemical Co vs. Black Swan Graphene
Performance |
| Timeline |
| Sumitomo Chemical |
| Black Swan Graphene |
Sumitomo Chemical and Black Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Black Swan
The main advantage of trading using opposite Sumitomo Chemical and Black Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Black Swan 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 Black Swan will offset losses from the drop in Black Swan's long position.| Sumitomo Chemical vs. Solvay SA | Sumitomo Chemical vs. Orbia Advance | Sumitomo Chemical vs. Braskem SA Class | Sumitomo Chemical vs. Dow Inc |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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