Correlation Between GLG LIFE and Sumitomo Mitsui

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

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

Diversification Opportunities for GLG LIFE and Sumitomo Mitsui

0.0

Correlation Coefficient

GLG LIFE  Sumitomo Mitsui

Pay attention - limited upside

The 3 months correlation between GLG and Sumitomo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of GLG LIFE i.e., GLG LIFE and Sumitomo Mitsui go up and down completely randomly.

Pair Corralation between GLG LIFE and Sumitomo Mitsui

If you would invest  2,228  in Sumitomo Mitsui Financial on December 21, 2024 and sell it today you would earn a total of  176.00  from holding Sumitomo Mitsui Financial or generate 7.9% return on investment over 90 days.

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

GLG LIFE TECH  vs.  Sumitomo Mitsui Financial

GLG LIFE TECH

Risk-Adjusted Performance

Very Weak

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

Sumitomo Mitsui Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Financial are ranked lower than 5 (%) 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.

Pair Trading with GLG LIFE and Sumitomo Mitsui

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

The idea behind GLG LIFE TECH and Sumitomo Mitsui Financial 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.