Correlation Between Intrusion and Sumitomo Metal

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

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

Diversification Opportunities for Intrusion and Sumitomo Metal

-0.51

Correlation Coefficient

Intrusion  Sumitomo Metal

Excellent diversification

The 3 months correlation between Intrusion and Sumitomo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Intrusion and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining and Intrusion 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 Intrusion are associated (or correlated) with Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of Intrusion i.e., Intrusion and Sumitomo Metal go up and down completely randomly.

Pair Corralation between Intrusion and Sumitomo Metal

Given the investment horizon of 90 days Intrusion is expected to generate 21.66 times more return on investment than Sumitomo Metal. However, Intrusion is 21.66 times more volatile than Sumitomo Metal Mining. It trades about 0.27 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.23 per unit of risk. If you would invest  58.00  in Intrusion on October 9, 2024 and sell it today you would earn a total of  259.00  from holding Intrusion or generate 446.55% return on investment over 90 days.

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

Intrusion  vs.  Sumitomo Metal Mining

Intrusion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intrusion are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Intrusion showed solid returns over the last few months and may actually be approaching a breakup point.

Sumitomo Metal Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumitomo Metal Mining 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.

Pair Trading with Intrusion and Sumitomo Metal

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

The idea behind Intrusion and Sumitomo Metal Mining 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.