Correlation Between Hurco Companies and SUMITOMO

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

By analyzing existing cross correlation between Hurco Companies and SUMITOMO MITSUI FINANCIAL, you can compare the effects of market volatilities on Hurco Companies and SUMITOMO 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 Hurco Companies with a short position of SUMITOMO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurco Companies and SUMITOMO.

Diversification Opportunities for Hurco Companies and SUMITOMO

0.47

Correlation Coefficient

Hurco Companies  SUMITOMO

Very weak diversification

The 3 months correlation between Hurco and SUMITOMO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies 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 Hurco Companies 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 Hurco Companies are associated (or correlated) with SUMITOMO. 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 Hurco Companies i.e., Hurco Companies and SUMITOMO go up and down completely randomly.

Pair Corralation between Hurco Companies and SUMITOMO

Given the investment horizon of 90 days Hurco Companies is expected to generate 2.77 times more return on investment than SUMITOMO. However, Hurco Companies is 2.77 times more volatile than SUMITOMO MITSUI FINANCIAL. It trades about 0.01 of its potential returns per unit of risk. SUMITOMO MITSUI FINANCIAL is currently generating about -0.15 per unit of risk. If you would invest  2,011  in Hurco Companies on October 21, 2024 and sell it today you would lose (9.00) from holding Hurco Companies or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Hurco Companies  vs.  SUMITOMO MITSUI FINANCIAL

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hurco Companies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SUMITOMO MITSUI FINANCIAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUMITOMO MITSUI FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SUMITOMO MITSUI FINANCIAL investors.

Pair Trading with Hurco Companies and SUMITOMO

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

The idea behind Hurco Companies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.