Correlation Between INFORMATION SVC and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC 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 INFORMATION SVC and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Sumitomo Chemical, you can compare the effects of market volatilities on INFORMATION SVC 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 INFORMATION SVC with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Sumitomo Chemical.
Diversification Opportunities for INFORMATION SVC and Sumitomo Chemical
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INFORMATION and Sumitomo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Sumitomo Chemical
Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 1.87 times more return on investment than Sumitomo Chemical. However, INFORMATION SVC is 1.87 times more volatile than Sumitomo Chemical. It trades about 0.32 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.27 per unit of risk. If you would invest 288.00 in INFORMATION SVC GRP on August 30, 2024 and sell it today you would earn a total of 52.00 from holding INFORMATION SVC GRP or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFORMATION SVC GRP vs. Sumitomo Chemical
Performance |
| Timeline |
| INFORMATION SVC GRP |
| Sumitomo Chemical |
INFORMATION SVC and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and Sumitomo Chemical
The main advantage of trading using opposite INFORMATION SVC and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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.| INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Superior Plus Corp | INFORMATION SVC vs. SIVERS SEMICONDUCTORS AB |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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