Correlation Between Sumitomo Mitsui and JHSF Participaes
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and JHSF Participaes 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 Mitsui and JHSF Participaes 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 JHSF Participaes SA, you can compare the effects of market volatilities on Sumitomo Mitsui and JHSF Participaes 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 Mitsui with a short position of JHSF Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and JHSF Participaes.
Diversification Opportunities for Sumitomo Mitsui and JHSF Participaes
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and JHSF is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and JHSF Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JHSF Participaes and Sumitomo Mitsui 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 JHSF Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JHSF Participaes has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and JHSF Participaes go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and JHSF Participaes
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.22 times more return on investment than JHSF Participaes. However, Sumitomo Mitsui Financial is 4.65 times less risky than JHSF Participaes. It trades about -0.14 of its potential returns per unit of risk. JHSF Participaes SA is currently generating about -0.05 per unit of risk. If you would invest 5,943 in Sumitomo Mitsui Financial on January 31, 2024 and sell it today you would lose (93.00) from holding Sumitomo Mitsui Financial or give up 1.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sumitomo Mitsui Financial vs. JHSF Participaes SA
Performance |
Timeline |
Sumitomo Mitsui Financial |
JHSF Participaes |
Sumitomo Mitsui and JHSF Participaes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Mitsui and JHSF Participaes
The main advantage of trading using opposite Sumitomo Mitsui and JHSF Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, JHSF Participaes 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 JHSF Participaes will offset losses from the drop in JHSF Participaes' long position.Sumitomo Mitsui vs. Bemobi Mobile Tech | Sumitomo Mitsui vs. The Trade Desk | Sumitomo Mitsui vs. Uber Technologies | Sumitomo Mitsui vs. Align Technology |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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