Correlation Between Uber Technologies and SUMITOMO

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

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

Diversification Opportunities for Uber Technologies and SUMITOMO

0.16

Correlation Coefficient

Uber Technologies  SUMITOMO

Average diversification

The 3 months correlation between Uber and SUMITOMO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and SUMITOMO go up and down completely randomly.

Pair Corralation between Uber Technologies and SUMITOMO

Given the investment horizon of 90 days Uber Technologies is expected to generate 11.03 times more return on investment than SUMITOMO. However, Uber Technologies is 11.03 times more volatile than SUMITOMO MITSUI FINANCIAL. It trades about 0.12 of its potential returns per unit of risk. SUMITOMO MITSUI FINANCIAL is currently generating about 0.09 per unit of risk. If you would invest  6,077  in Uber Technologies on December 30, 2024 and sell it today you would earn a total of  1,198  from holding Uber Technologies or generate 19.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Uber Technologies  vs.  SUMITOMO MITSUI FINANCIAL

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

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 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SUMITOMO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Uber Technologies and SUMITOMO

The main advantage of trading using opposite Uber Technologies and SUMITOMO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.