Correlation Between Stanley Electric and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Stanley Electric and Sumitomo Rubber 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 Stanley Electric and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Electric Co and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Stanley Electric and Sumitomo Rubber 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 Stanley Electric with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Electric and Sumitomo Rubber.
Diversification Opportunities for Stanley Electric and Sumitomo Rubber
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stanley and Sumitomo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Electric Co and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and Stanley Electric 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 Stanley Electric Co are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of Stanley Electric i.e., Stanley Electric and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Stanley Electric and Sumitomo Rubber
Assuming the 90 days trading horizon Stanley Electric Co is expected to under-perform the Sumitomo Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Stanley Electric Co is 3.9 times less risky than Sumitomo Rubber. The stock trades about -0.02 of its potential returns per unit of risk. The Sumitomo Rubber Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 374.00 in Sumitomo Rubber Industries on November 6, 2024 and sell it today you would earn a total of 736.00 from holding Sumitomo Rubber Industries or generate 196.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Electric Co vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Stanley Electric |
| Sumitomo Rubber Indu |
Stanley Electric and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Electric and Sumitomo Rubber
The main advantage of trading using opposite Stanley Electric and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Electric position performs unexpectedly, Sumitomo Rubber 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 Sumitomo Rubber will offset losses from the drop in Sumitomo Rubber's long position.| Stanley Electric vs. ANGANG STEEL H | Stanley Electric vs. MAANSHAN IRON H | Stanley Electric vs. Coffee Holding Co | Stanley Electric vs. US FOODS HOLDING |
| Sumitomo Rubber vs. bet at home AG | Sumitomo Rubber vs. ITALIAN WINE BRANDS | Sumitomo Rubber vs. DFS Furniture PLC | Sumitomo Rubber vs. Addus HomeCare |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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