Correlation Between Sumitomo Mitsui and Penta-Ocean Construction
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Penta-Ocean Construction 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 Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and Penta Ocean Construction Co, you can compare the effects of market volatilities on Sumitomo Mitsui and Penta-Ocean Construction 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 Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Penta-Ocean Construction.
Diversification Opportunities for Sumitomo Mitsui and Penta-Ocean Construction
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Penta-Ocean is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction 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 Construction are associated (or correlated) with Penta-Ocean Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta-Ocean Construction has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Penta-Ocean Construction go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Penta-Ocean Construction
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 1.06 times more return on investment than Penta-Ocean Construction. However, Sumitomo Mitsui is 1.06 times more volatile than Penta Ocean Construction Co. It trades about 0.11 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.0 per unit of risk. If you would invest 232.00 in Sumitomo Mitsui Construction on September 6, 2024 and sell it today you would earn a total of 24.00 from holding Sumitomo Mitsui Construction or generate 10.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sumitomo Mitsui Construction vs. Penta Ocean Construction Co
Performance |
Timeline |
Sumitomo Mitsui Cons |
Penta-Ocean Construction |
Sumitomo Mitsui and Penta-Ocean Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Mitsui and Penta-Ocean Construction
The main advantage of trading using opposite Sumitomo Mitsui and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Penta-Ocean Construction 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 Penta-Ocean Construction will offset losses from the drop in Penta-Ocean Construction's long position.Sumitomo Mitsui vs. THORNEY TECHS LTD | Sumitomo Mitsui vs. ALEFARM BREWING DK 05 | Sumitomo Mitsui vs. PKSHA TECHNOLOGY INC | Sumitomo Mitsui vs. NetSol Technologies |
Penta-Ocean Construction vs. MAGNUM MINING EXP | Penta-Ocean Construction vs. Evolution Mining Limited | Penta-Ocean Construction vs. Zijin Mining Group | Penta-Ocean Construction vs. GALENA MINING LTD |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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