Correlation Between Sumitomo Mitsui and PagerDuty

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

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

Diversification Opportunities for Sumitomo Mitsui and PagerDuty

-0.06

Correlation Coefficient

Sumitomo Mitsui  PagerDuty

Good diversification

The 3 months correlation between Sumitomo and PagerDuty is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and PagerDuty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagerDuty and Sumitomo Mitsui 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 Sumitomo Mitsui Construction are associated (or correlated) with PagerDuty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagerDuty has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and PagerDuty go up and down completely randomly.

Pair Corralation between Sumitomo Mitsui and PagerDuty

Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.88 times more return on investment than PagerDuty. However, Sumitomo Mitsui Construction is 1.13 times less risky than PagerDuty. It trades about 0.05 of its potential returns per unit of risk. PagerDuty is currently generating about 0.0 per unit of risk. If you would invest  248.00  in Sumitomo Mitsui Construction on December 24, 2024 and sell it today you would earn a total of  14.00  from holding Sumitomo Mitsui Construction or generate 5.65% return on investment over 90 days.

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

Sumitomo Mitsui Construction  vs.  PagerDuty

Sumitomo Mitsui Cons

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sumitomo Mitsui may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PagerDuty

Risk-Adjusted Performance

Very Weak

Over the last 90 days PagerDuty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PagerDuty is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sumitomo Mitsui and PagerDuty

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

The idea behind Sumitomo Mitsui Construction and PagerDuty 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.