Correlation Between Sumitomo Corp and Mitsui
Can any of the company-specific risk be diversified away by investing in both Sumitomo Corp and 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 Sumitomo Corp and Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Corp ADR and Mitsui Co, you can compare the effects of market volatilities on Sumitomo Corp and 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 Sumitomo Corp with a short position of Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Corp and Mitsui.
Diversification Opportunities for Sumitomo Corp and Mitsui
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and Mitsui is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Corp ADR and Mitsui Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui and Sumitomo Corp 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 Corp ADR are associated (or correlated) with Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui has no effect on the direction of Sumitomo Corp i.e., Sumitomo Corp and Mitsui go up and down completely randomly.
Pair Corralation between Sumitomo Corp and Mitsui
Assuming the 90 days horizon Sumitomo Corp ADR is expected to under-perform the Mitsui. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sumitomo Corp ADR is 2.57 times less risky than Mitsui. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Mitsui Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,964 in Mitsui Co on September 13, 2024 and sell it today you would earn a total of 136.00 from holding Mitsui Co or generate 6.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sumitomo Corp ADR vs. Mitsui Co
Performance |
Timeline |
Sumitomo Corp ADR |
Mitsui |
Sumitomo Corp and Mitsui Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Corp and Mitsui
The main advantage of trading using opposite Sumitomo Corp and Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Corp position performs unexpectedly, 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 Mitsui will offset losses from the drop in Mitsui's long position.Sumitomo Corp vs. Itochu Corp ADR | Sumitomo Corp vs. Mitsubishi Corp | Sumitomo Corp vs. ITOCHU | Sumitomo Corp vs. Marubeni Corp ADR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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