Correlation Between Sumitomo Chemical and Huntsman
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Huntsman 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 Huntsman 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 Huntsman, you can compare the effects of market volatilities on Sumitomo Chemical and Huntsman 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 Huntsman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Huntsman.
Diversification Opportunities for Sumitomo Chemical and Huntsman
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Huntsman is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical Co and Huntsman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman 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 Huntsman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Huntsman go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Huntsman
Assuming the 90 days horizon Sumitomo Chemical Co is expected to generate 0.89 times more return on investment than Huntsman. However, Sumitomo Chemical Co is 1.13 times less risky than Huntsman. It trades about 0.03 of its potential returns per unit of risk. Huntsman is currently generating about -0.03 per unit of risk. If you would invest 1,078 in Sumitomo Chemical Co on October 24, 2024 and sell it today you would earn a total of 7.00 from holding Sumitomo Chemical Co or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical Co vs. Huntsman
Performance |
| Timeline |
| Sumitomo Chemical |
| Huntsman |
Sumitomo Chemical and Huntsman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Huntsman
The main advantage of trading using opposite Sumitomo Chemical and Huntsman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Huntsman 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 Huntsman will offset losses from the drop in Huntsman's long position.| Sumitomo Chemical vs. Solvay SA | Sumitomo Chemical vs. Orbia Advance | Sumitomo Chemical vs. Braskem SA Class | Sumitomo Chemical vs. Dow Inc |
| Huntsman vs. Valhi Inc | Huntsman vs. Lsb Industries | Huntsman vs. Westlake Chemical Partners | Huntsman vs. Braskem SA Class |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |