Correlation Between Sumitomo Chemical and NanoXplore
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and NanoXplore 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 NanoXplore 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 NanoXplore, you can compare the effects of market volatilities on Sumitomo Chemical and NanoXplore 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 NanoXplore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and NanoXplore.
Diversification Opportunities for Sumitomo Chemical and NanoXplore
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sumitomo and NanoXplore is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical Co and NanoXplore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoXplore 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 NanoXplore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoXplore has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and NanoXplore go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and NanoXplore
Assuming the 90 days horizon Sumitomo Chemical Co is expected to generate 0.7 times more return on investment than NanoXplore. However, Sumitomo Chemical Co is 1.44 times less risky than NanoXplore. It trades about -0.03 of its potential returns per unit of risk. NanoXplore is currently generating about -0.07 per unit of risk. If you would invest 1,095 in Sumitomo Chemical Co on November 3, 2024 and sell it today you would lose (16.00) from holding Sumitomo Chemical Co or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical Co vs. NanoXplore
Performance |
| Timeline |
| Sumitomo Chemical |
| NanoXplore |
Sumitomo Chemical and NanoXplore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and NanoXplore
The main advantage of trading using opposite Sumitomo Chemical and NanoXplore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, NanoXplore 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 NanoXplore will offset losses from the drop in NanoXplore's long position.| Sumitomo Chemical vs. Solvay SA | Sumitomo Chemical vs. Orbia Advance | Sumitomo Chemical vs. Braskem SA Class | Sumitomo Chemical vs. Dow Inc |
| NanoXplore vs. Altech Batteries Limited | NanoXplore vs. Asahi Kaisei Corp | NanoXplore vs. ASP Isotopes Common | NanoXplore vs. First Graphene |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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