Correlation Between Sumitomo and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Sumitomo and Sekisui Chemical 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 and Sekisui Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo and Sekisui Chemical Co, you can compare the effects of market volatilities on Sumitomo and Sekisui Chemical 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 with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo and Sekisui Chemical.
Diversification Opportunities for Sumitomo and Sekisui Chemical
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Sekisui is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and Sumitomo 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 are associated (or correlated) with Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Sumitomo i.e., Sumitomo and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Sumitomo and Sekisui Chemical
If you would invest 1,550 in Sekisui Chemical Co on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Sekisui Chemical Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo vs. Sekisui Chemical Co
Performance |
| Timeline |
| Sumitomo |
| Sekisui Chemical |
Sumitomo and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo and Sekisui Chemical
The main advantage of trading using opposite Sumitomo and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.The idea behind Sumitomo and Sekisui Chemical Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sekisui Chemical vs. First Ship Lease | Sekisui Chemical vs. Ambev SA ADR | Sekisui Chemical vs. Vita Coco | Sekisui Chemical vs. Diageo PLC ADR |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |