Correlation Between SUMITOMO P and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both SUMITOMO P and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on SUMITOMO P and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUMITOMO P and AstraZeneca PLC.
Diversification Opportunities for SUMITOMO P and AstraZeneca PLC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SUMITOMO and AstraZeneca is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO P SP and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of SUMITOMO P i.e., SUMITOMO P and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between SUMITOMO P and AstraZeneca PLC
Assuming the 90 days trading horizon SUMITOMO P SP is expected to generate 1.44 times more return on investment than AstraZeneca PLC. However, SUMITOMO P is 1.44 times more volatile than AstraZeneca PLC. It trades about 0.04 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.01 per unit of risk. If you would invest 1,405 in SUMITOMO P SP on August 30, 2024 and sell it today you would earn a total of 545.00 from holding SUMITOMO P SP or generate 38.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUMITOMO P SP vs. AstraZeneca PLC
Performance |
| Timeline |
| SUMITOMO P SP |
| AstraZeneca PLC |
SUMITOMO P and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUMITOMO P and AstraZeneca PLC
The main advantage of trading using opposite SUMITOMO P and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUMITOMO P position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| SUMITOMO P vs. XLMedia PLC | SUMITOMO P vs. Diamondrock Hospitality Co | SUMITOMO P vs. Live Nation Entertainment | SUMITOMO P vs. GigaMedia |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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