Correlation Between SENECA FOODS-A and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A 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 SENECA FOODS-A and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and Sumitomo Chemical, you can compare the effects of market volatilities on SENECA FOODS-A 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 SENECA FOODS-A with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Sumitomo Chemical.
Diversification Opportunities for SENECA FOODS-A and Sumitomo Chemical
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SENECA and Sumitomo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and SENECA FOODS-A 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 SENECA FOODS A 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 SENECA FOODS-A i.e., SENECA FOODS-A and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Sumitomo Chemical
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 2.13 times more return on investment than Sumitomo Chemical. However, SENECA FOODS-A is 2.13 times more volatile than Sumitomo Chemical. It trades about 0.28 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.24 per unit of risk. If you would invest 5,500 in SENECA FOODS A on September 1, 2024 and sell it today you would earn a total of 950.00 from holding SENECA FOODS A or generate 17.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Sumitomo Chemical
Performance |
| Timeline |
| SENECA FOODS A |
| Sumitomo Chemical |
SENECA FOODS-A and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Sumitomo Chemical
The main advantage of trading using opposite SENECA FOODS-A and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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.| SENECA FOODS-A vs. SIVERS SEMICONDUCTORS AB | SENECA FOODS-A vs. Darden Restaurants | SENECA FOODS-A vs. Reliance Steel Aluminum | SENECA FOODS-A vs. Q2M Managementberatung AG |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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