Correlation Between Sanyo Special and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Sanyo Special and Summit 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 Sanyo Special and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyo Special Steel and Summit Materials, you can compare the effects of market volatilities on Sanyo Special and Summit 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 Sanyo Special with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Special and Summit Materials.
Diversification Opportunities for Sanyo Special and Summit Materials
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sanyo and Summit is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Special Steel and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Sanyo Special 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 Sanyo Special Steel are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Sanyo Special i.e., Sanyo Special and Summit Materials go up and down completely randomly.
Pair Corralation between Sanyo Special and Summit Materials
Assuming the 90 days horizon Sanyo Special is expected to generate 54.12 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Sanyo Special Steel is 42.87 times less risky than Summit Materials. It trades about 0.07 of its potential returns per unit of risk. Summit Materials is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,618 in Summit Materials on August 28, 2024 and sell it today you would earn a total of 1,457 from holding Summit Materials or generate 40.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Sanyo Special Steel vs. Summit Materials
Performance |
| Timeline |
| Sanyo Special Steel |
| Summit Materials |
Sanyo Special and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Special and Summit Materials
The main advantage of trading using opposite Sanyo Special and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Special position performs unexpectedly, Summit 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Sanyo Special vs. Apogee Enterprises | Sanyo Special vs. RBC Bearings Incorporated | Sanyo Special vs. Canlan Ice Sports | Sanyo Special vs. JD Sports Fashion |
| Summit Materials vs. Holcim | Summit Materials vs. Lafargeholcim Ltd ADR | Summit Materials vs. The Monarch Cement |
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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