Correlation Between NanoXplore and Sumitomo Chemical

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

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

Diversification Opportunities for NanoXplore and Sumitomo Chemical

-0.44

Correlation Coefficient

NanoXplore  Sumitomo Chemical

Very good diversification

The 3 months correlation between NanoXplore and Sumitomo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NanoXplore and Sumitomo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and NanoXplore 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 NanoXplore are associated (or correlated) with Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of NanoXplore i.e., NanoXplore and Sumitomo Chemical go up and down completely randomly.

Pair Corralation between NanoXplore and Sumitomo Chemical

Assuming the 90 days horizon NanoXplore is expected to generate 1.4 times more return on investment than Sumitomo Chemical. However, NanoXplore is 1.4 times more volatile than Sumitomo Chemical Co. It trades about 0.02 of its potential returns per unit of risk. Sumitomo Chemical Co is currently generating about -0.03 per unit of risk. If you would invest  163.00  in NanoXplore on November 29, 2024 and sell it today you would earn a total of  3.00  from holding NanoXplore or generate 1.84% return on investment over 90 days.

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

NanoXplore  vs.  Sumitomo Chemical Co

NanoXplore

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NanoXplore are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NanoXplore is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sumitomo Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sumitomo Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Sumitomo Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NanoXplore and Sumitomo Chemical

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

The idea behind NanoXplore and Sumitomo Chemical Co 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 CEOs Directory module to screen CEOs from public companies around the world.