Correlation Between SUMITOMO and Hurco Companies

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

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

Diversification Opportunities for SUMITOMO and Hurco Companies

0.0

Correlation Coefficient

SUMITOMO  Hurco Companies

Pay attention - limited upside

The 3 months correlation between SUMITOMO and Hurco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO MITSUI FINANCIAL and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and SUMITOMO 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 MITSUI FINANCIAL are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of SUMITOMO i.e., SUMITOMO and Hurco Companies go up and down completely randomly.

Pair Corralation between SUMITOMO and Hurco Companies

Assuming the 90 days trading horizon SUMITOMO MITSUI FINANCIAL is expected to generate 0.16 times more return on investment than Hurco Companies. However, SUMITOMO MITSUI FINANCIAL is 6.18 times less risky than Hurco Companies. It trades about 0.02 of its potential returns per unit of risk. Hurco Companies is currently generating about -0.08 per unit of risk. If you would invest  8,483  in SUMITOMO MITSUI FINANCIAL on December 29, 2024 and sell it today you would earn a total of  37.00  from holding SUMITOMO MITSUI FINANCIAL or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

SUMITOMO MITSUI FINANCIAL  vs.  Hurco Companies

SUMITOMO MITSUI FINANCIAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SUMITOMO MITSUI FINANCIAL are ranked lower than 1 (%) 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.

Hurco Companies

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SUMITOMO and Hurco Companies

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

The idea behind SUMITOMO MITSUI FINANCIAL and Hurco Companies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.