Correlation Between Sumitomo Corp and Mitsui Co
Can any of the company-specific risk be diversified away by investing in both Sumitomo Corp and Mitsui Co 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 Corp and Mitsui Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Corp ADR and Mitsui Co, you can compare the effects of market volatilities on Sumitomo Corp and Mitsui Co 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 Corp with a short position of Mitsui Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Corp and Mitsui Co.
Diversification Opportunities for Sumitomo Corp and Mitsui Co
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sumitomo and Mitsui is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Corp ADR and Mitsui Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Co and Sumitomo Corp 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 Corp ADR are associated (or correlated) with Mitsui Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Co has no effect on the direction of Sumitomo Corp i.e., Sumitomo Corp and Mitsui Co go up and down completely randomly.
Pair Corralation between Sumitomo Corp and Mitsui Co
Assuming the 90 days horizon Sumitomo Corp is expected to generate 26.3 times less return on investment than Mitsui Co. But when comparing it to its historical volatility, Sumitomo Corp ADR is 4.99 times less risky than Mitsui Co. It trades about 0.01 of its potential returns per unit of risk. Mitsui Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,701 in Mitsui Co on September 2, 2024 and sell it today you would earn a total of 299.00 from holding Mitsui Co or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Sumitomo Corp ADR vs. Mitsui Co
Performance |
| Timeline |
| Sumitomo Corp ADR |
| Mitsui Co |
Sumitomo Corp and Mitsui Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Corp and Mitsui Co
The main advantage of trading using opposite Sumitomo Corp and Mitsui Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Corp position performs unexpectedly, Mitsui Co 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 Mitsui Co will offset losses from the drop in Mitsui Co's long position.| Sumitomo Corp vs. Itochu Corp ADR | Sumitomo Corp vs. Mitsubishi Corp | Sumitomo Corp vs. ITOCHU | Sumitomo Corp vs. Marubeni Corp ADR |
| Mitsui Co vs. ITOCHU | Mitsui Co vs. Sumitomo Corp ADR | Mitsui Co vs. Marubeni Corp ADR | Mitsui Co vs. Mitsubishi Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |