Correlation Between Sumitomo Mitsui and Apple

Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Sumitomo Mitsui and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Apple.

Diversification Opportunities for Sumitomo Mitsui and Apple

-0.79

Correlation Coefficient

Sumitomo Mitsui  Apple

Pay attention - limited upside

The 3 months correlation between Sumitomo and Apple is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Apple go up and down completely randomly.

Pair Corralation between Sumitomo Mitsui and Apple

Assuming the 90 days horizon Sumitomo Mitsui Financial is expected to generate 1.66 times more return on investment than Apple. However, Sumitomo Mitsui is 1.66 times more volatile than Apple Inc. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.01 per unit of risk. If you would invest  5,605  in Sumitomo Mitsui Financial on February 1, 2024 and sell it today you would earn a total of  130.00  from holding Sumitomo Mitsui Financial or generate 2.32% return on investment over 90 days.

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

Sumitomo Mitsui Financial  vs.  Apple Inc

Sumitomo Mitsui Financial

Risk-Adjusted Performance

6 of 100

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 nearly inconsistent basic indicators, Sumitomo Mitsui reported solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sumitomo Mitsui and Apple

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

The idea behind Sumitomo Mitsui Financial and Apple Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.