Correlation Between Windrock Land and Sumitomo Corp

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

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

Diversification Opportunities for Windrock Land and Sumitomo Corp

0.5

Correlation Coefficient

Windrock Land  Sumitomo Corp

Very weak diversification

The 3 months correlation between Windrock and Sumitomo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Windrock Land Co and Sumitomo Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Corp ADR and Windrock Land 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 Windrock Land Co are associated (or correlated) with Sumitomo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Corp ADR has no effect on the direction of Windrock Land i.e., Windrock Land and Sumitomo Corp go up and down completely randomly.

Pair Corralation between Windrock Land and Sumitomo Corp

Given the investment horizon of 90 days Windrock Land Co is expected to generate 0.81 times more return on investment than Sumitomo Corp. However, Windrock Land Co is 1.23 times less risky than Sumitomo Corp. It trades about -0.01 of its potential returns per unit of risk. Sumitomo Corp ADR is currently generating about -0.06 per unit of risk. If you would invest  50,581  in Windrock Land Co on September 4, 2024 and sell it today you would lose (581.00) from holding Windrock Land Co or give up 1.15% of portfolio value over 90 days.

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

Windrock Land Co  vs.  Sumitomo Corp ADR

Windrock Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Windrock Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Windrock Land is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sumitomo Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Windrock Land and Sumitomo Corp

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

The idea behind Windrock Land Co and Sumitomo Corp ADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.