Correlation Between Sumitomo and Sojitz
Can any of the company-specific risk be diversified away by investing in both Sumitomo and Sojitz 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 Sojitz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo and Sojitz, you can compare the effects of market volatilities on Sumitomo and Sojitz 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 Sojitz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo and Sojitz.
Diversification Opportunities for Sumitomo and Sojitz
Pay attention - limited upside
The 3 months correlation between Sumitomo and Sojitz is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo and Sojitz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sojitz 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 Sojitz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sojitz has no effect on the direction of Sumitomo i.e., Sumitomo and Sojitz go up and down completely randomly.
Pair Corralation between Sumitomo and Sojitz
If you would invest (100.00) in Sojitz on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Sojitz or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Sumitomo vs. Sojitz
Performance |
| Timeline |
| Sumitomo |
| Sojitz |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sumitomo and Sojitz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo and Sojitz
The main advantage of trading using opposite Sumitomo and Sojitz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo position performs unexpectedly, Sojitz 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 Sojitz will offset losses from the drop in Sojitz's long position.The idea behind Sumitomo and Sojitz 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.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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