Correlation Between SUMITOMO P and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both SUMITOMO P and BANK HANDLOWY 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 P and BANK HANDLOWY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUMITOMO P SP and BANK HANDLOWY, you can compare the effects of market volatilities on SUMITOMO P and BANK HANDLOWY 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 P with a short position of BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUMITOMO P and BANK HANDLOWY.
Diversification Opportunities for SUMITOMO P and BANK HANDLOWY
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SUMITOMO and BANK is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO P SP and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY and SUMITOMO P 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 P SP are associated (or correlated) with BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of SUMITOMO P i.e., SUMITOMO P and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between SUMITOMO P and BANK HANDLOWY
Assuming the 90 days trading horizon SUMITOMO P SP is expected to generate 3.94 times more return on investment than BANK HANDLOWY. However, SUMITOMO P is 3.94 times more volatile than BANK HANDLOWY. It trades about 0.04 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about -0.35 per unit of risk. If you would invest 1,930 in SUMITOMO P SP on August 29, 2024 and sell it today you would earn a total of 20.00 from holding SUMITOMO P SP or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUMITOMO P SP vs. BANK HANDLOWY
Performance |
| Timeline |
| SUMITOMO P SP |
| BANK HANDLOWY |
SUMITOMO P and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUMITOMO P and BANK HANDLOWY
The main advantage of trading using opposite SUMITOMO P and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUMITOMO P position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| SUMITOMO P vs. Superior Plus Corp | SUMITOMO P vs. NMI Holdings | SUMITOMO P vs. Origin Agritech | SUMITOMO P vs. SIVERS SEMICONDUCTORS AB |
| BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Microsoft | BANK HANDLOWY vs. Microsoft |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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