Correlation Between Sumitomo Mitsui and AUSTEVOLL SEAFOOD

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

Diversification Opportunities for Sumitomo Mitsui and AUSTEVOLL SEAFOOD

0.03

Correlation Coefficient

Sumitomo Mitsui  AUSTEVOLL SEAFOOD

Significant diversification

The 3 months correlation between Sumitomo and AUSTEVOLL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSTEVOLL SEAFOOD has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and AUSTEVOLL SEAFOOD go up and down completely randomly.

Pair Corralation between Sumitomo Mitsui and AUSTEVOLL SEAFOOD

Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 1.48 times less return on investment than AUSTEVOLL SEAFOOD. In addition to that, Sumitomo Mitsui is 1.03 times more volatile than AUSTEVOLL SEAFOOD. It trades about 0.06 of its total potential returns per unit of risk. AUSTEVOLL SEAFOOD is currently generating about 0.09 per unit of volatility. If you would invest  796.00  in AUSTEVOLL SEAFOOD on September 1, 2024 and sell it today you would earn a total of  66.00  from holding AUSTEVOLL SEAFOOD or generate 8.29% return on investment over 90 days.

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

Sumitomo Mitsui Construction  vs.  AUSTEVOLL SEAFOOD

Sumitomo Mitsui Cons

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sumitomo Mitsui is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AUSTEVOLL SEAFOOD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AUSTEVOLL SEAFOOD may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Sumitomo Mitsui and AUSTEVOLL SEAFOOD

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

The idea behind Sumitomo Mitsui Construction and AUSTEVOLL SEAFOOD 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 Transaction History module to view history of all your transactions and understand their impact on performance.