Correlation Between Sumitomo and SUMITOMO P
Can any of the company-specific risk be diversified away by investing in both Sumitomo and SUMITOMO P 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 SUMITOMO P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo and SUMITOMO P SP, you can compare the effects of market volatilities on Sumitomo and SUMITOMO P 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 SUMITOMO P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo and SUMITOMO P.
Diversification Opportunities for Sumitomo and SUMITOMO P
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sumitomo and SUMITOMO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo and SUMITOMO P SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO P SP 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 SUMITOMO P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO P SP has no effect on the direction of Sumitomo i.e., Sumitomo and SUMITOMO P go up and down completely randomly.
Pair Corralation between Sumitomo and SUMITOMO P
Assuming the 90 days trading horizon Sumitomo is expected to generate 1.34 times less return on investment than SUMITOMO P. In addition to that, Sumitomo is 1.18 times more volatile than SUMITOMO P SP. It trades about 0.02 of its total potential returns per unit of risk. SUMITOMO P SP is currently generating about 0.03 per unit of volatility. If you would invest 1,720 in SUMITOMO P SP on August 31, 2024 and sell it today you would earn a total of 260.00 from holding SUMITOMO P SP or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Sumitomo vs. SUMITOMO P SP
Performance |
| Timeline |
| Sumitomo |
| SUMITOMO P SP |
Sumitomo and SUMITOMO P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo and SUMITOMO P
The main advantage of trading using opposite Sumitomo and SUMITOMO P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo position performs unexpectedly, SUMITOMO P 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 P will offset losses from the drop in SUMITOMO P's long position.| Sumitomo vs. Magnachip Semiconductor | Sumitomo vs. Apollo Investment Corp | Sumitomo vs. TOREX SEMICONDUCTOR LTD | Sumitomo vs. ON SEMICONDUCTOR |
| SUMITOMO P vs. Superior Plus Corp | SUMITOMO P vs. NMI Holdings | SUMITOMO P vs. Origin Agritech | SUMITOMO P vs. SIVERS SEMICONDUCTORS AB |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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