Correlation Between Clean Energy and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Sumitomo Chemical 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 Clean Energy and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Energy Fuels and Sumitomo Chemical, you can compare the effects of market volatilities on Clean Energy and Sumitomo Chemical 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 Clean Energy with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Sumitomo Chemical.
Diversification Opportunities for Clean Energy and Sumitomo Chemical
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clean and Sumitomo is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and Clean Energy 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 Clean Energy Fuels are associated (or correlated) with Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of Clean Energy i.e., Clean Energy and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between Clean Energy and Sumitomo Chemical
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the Sumitomo Chemical. In addition to that, Clean Energy is 3.41 times more volatile than Sumitomo Chemical. It trades about -0.04 of its total potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.11 per unit of volatility. If you would invest 228.00 in Sumitomo Chemical on August 29, 2024 and sell it today you would lose (8.00) from holding Sumitomo Chemical or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. Sumitomo Chemical
Performance |
| Timeline |
| Clean Energy Fuels |
| Sumitomo Chemical |
Clean Energy and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Sumitomo Chemical
The main advantage of trading using opposite Clean Energy and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Sumitomo Chemical 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 Chemical will offset losses from the drop in Sumitomo Chemical's long position.| Clean Energy vs. Coor Service Management | Clean Energy vs. The Trade Desk | Clean Energy vs. Platinum Investment Management | Clean Energy vs. Fast Retailing Co |
| Sumitomo Chemical vs. Superior Plus Corp | Sumitomo Chemical vs. NMI Holdings | Sumitomo Chemical vs. Origin Agritech | Sumitomo Chemical vs. SIVERS SEMICONDUCTORS AB |
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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