Correlation Between Materialise and Sumitomo Rubber

Can any of the company-specific risk be diversified away by investing in both Materialise and Sumitomo Rubber 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 Materialise and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Materialise NV and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Materialise and Sumitomo Rubber 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 Materialise with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Sumitomo Rubber.

Diversification Opportunities for Materialise and Sumitomo Rubber

0.1

Correlation Coefficient

Materialise  Sumitomo Rubber

Average diversification

The 3 months correlation between Materialise and Sumitomo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and Materialise 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 Materialise NV are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of Materialise i.e., Materialise and Sumitomo Rubber go up and down completely randomly.

Pair Corralation between Materialise and Sumitomo Rubber

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the Sumitomo Rubber. In addition to that, Materialise is 5.08 times more volatile than Sumitomo Rubber Industries. It trades about -0.23 of its total potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.01 per unit of volatility. If you would invest  1,110  in Sumitomo Rubber Industries on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Sumitomo Rubber Industries or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Materialise NV  vs.  Sumitomo Rubber Industries

Materialise NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sumitomo Rubber Indu

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Rubber Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sumitomo Rubber may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Materialise and Sumitomo Rubber

The main advantage of trading using opposite Materialise and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Sumitomo Rubber 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 Rubber will offset losses from the drop in Sumitomo Rubber's long position.

The idea behind Materialise NV and Sumitomo Rubber Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.