Correlation Between Sumco Corp and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Sumco Corp and Applied Materials 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 Sumco Corp and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumco Corp ADR and Applied Materials, you can compare the effects of market volatilities on Sumco Corp and Applied Materials 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 Sumco Corp with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumco Corp and Applied Materials.
Diversification Opportunities for Sumco Corp and Applied Materials
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumco and Applied is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sumco Corp ADR and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Sumco 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 Sumco Corp ADR are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Sumco Corp i.e., Sumco Corp and Applied Materials go up and down completely randomly.
Pair Corralation between Sumco Corp and Applied Materials
Assuming the 90 days horizon Sumco Corp ADR is expected to under-perform the Applied Materials. In addition to that, Sumco Corp is 1.13 times more volatile than Applied Materials. It trades about -0.04 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.05 per unit of volatility. If you would invest 11,796 in Applied Materials on October 25, 2024 and sell it today you would earn a total of 7,270 from holding Applied Materials or generate 61.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumco Corp ADR vs. Applied Materials
Performance |
| Timeline |
| Sumco Corp ADR |
| Applied Materials |
Sumco Corp and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumco Corp and Applied Materials
The main advantage of trading using opposite Sumco Corp and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumco Corp position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Sumco Corp vs. Lasertec | Sumco Corp vs. Asm Pacific Technology | Sumco Corp vs. Disco Corp ADR | Sumco Corp vs. Tokyo Electron |
| Applied Materials vs. Cohu Inc | Applied Materials vs. Entegris | Applied Materials vs. Kulicke and Soffa | Applied Materials vs. Photronics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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