Correlation Between CENTURIA OFFICE and Sumitomo Rubber

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

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

Diversification Opportunities for CENTURIA OFFICE and Sumitomo Rubber

-0.66

Correlation Coefficient

CENTURIA OFFICE  Sumitomo Rubber

Excellent diversification

The 3 months correlation between CENTURIA and Sumitomo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT 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 CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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 CENTURIA OFFICE i.e., CENTURIA OFFICE and Sumitomo Rubber go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Sumitomo Rubber

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to generate 1.93 times more return on investment than Sumitomo Rubber. However, CENTURIA OFFICE is 1.93 times more volatile than Sumitomo Rubber Industries. It trades about 0.13 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.01 per unit of risk. If you would invest  63.00  in CENTURIA OFFICE REIT on October 11, 2024 and sell it today you would earn a total of  4.00  from holding CENTURIA OFFICE REIT or generate 6.35% return on investment over 90 days.

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

CENTURIA OFFICE REIT  vs.  Sumitomo Rubber Industries

CENTURIA OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sumitomo Rubber Indu

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Rubber Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sumitomo Rubber reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CENTURIA OFFICE and Sumitomo Rubber

The main advantage of trading using opposite CENTURIA OFFICE and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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.

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