Correlation Between Tokyo Electron and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Tokyo Electron and Sumitomo Electric 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 Tokyo Electron and Sumitomo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electron and Sumitomo Electric Industries, you can compare the effects of market volatilities on Tokyo Electron and Sumitomo Electric 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 Tokyo Electron with a short position of Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and Sumitomo Electric.
Diversification Opportunities for Tokyo Electron and Sumitomo Electric
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tokyo and Sumitomo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric and Tokyo Electron 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 Tokyo Electron are associated (or correlated) with Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Tokyo Electron i.e., Tokyo Electron and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Tokyo Electron and Sumitomo Electric
Assuming the 90 days horizon Tokyo Electron is expected to generate 7.63 times less return on investment than Sumitomo Electric. In addition to that, Tokyo Electron is 1.7 times more volatile than Sumitomo Electric Industries. It trades about 0.01 of its total potential returns per unit of risk. Sumitomo Electric Industries is currently generating about 0.09 per unit of volatility. If you would invest 1,253 in Sumitomo Electric Industries on August 24, 2024 and sell it today you would earn a total of 592.00 from holding Sumitomo Electric Industries or generate 47.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tokyo Electron vs. Sumitomo Electric Industries
Performance |
| Timeline |
| Tokyo Electron |
| Sumitomo Electric |
Tokyo Electron and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyo Electron and Sumitomo Electric
The main advantage of trading using opposite Tokyo Electron and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electron position performs unexpectedly, Sumitomo Electric 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 Electric will offset losses from the drop in Sumitomo Electric's long position.| Tokyo Electron vs. ASML Holding NV | Tokyo Electron vs. ASML Holding NV | Tokyo Electron vs. Applied Materials | Tokyo Electron vs. Lam Research Corp |
| Sumitomo Electric vs. Allison Transmission Holdings | Sumitomo Electric vs. Luminar Technologies | Sumitomo Electric vs. Lear Corporation | Sumitomo Electric vs. BorgWarner |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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