Correlation Between China BlueChemical and Sumitomo Mitsui

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Sumitomo Mitsui 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 China BlueChemical and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on China BlueChemical and Sumitomo Mitsui 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 China BlueChemical with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Sumitomo Mitsui.

Diversification Opportunities for China BlueChemical and Sumitomo Mitsui

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between China and Sumitomo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons and China BlueChemical 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 China BlueChemical are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of China BlueChemical i.e., China BlueChemical and Sumitomo Mitsui go up and down completely randomly.

Pair Corralation between China BlueChemical and Sumitomo Mitsui

Assuming the 90 days horizon China BlueChemical is expected to generate 2.48 times more return on investment than Sumitomo Mitsui. However, China BlueChemical is 2.48 times more volatile than Sumitomo Mitsui Construction. It trades about 0.06 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about 0.09 per unit of risk. If you would invest  21.00  in China BlueChemical on September 5, 2024 and sell it today you would earn a total of  2.00  from holding China BlueChemical or generate 9.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

China BlueChemical  vs.  Sumitomo Mitsui Construction

 Performance 
       Timeline  
China BlueChemical 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in China BlueChemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China BlueChemical reported solid returns over the last few months and may actually be approaching a breakup point.
Sumitomo Mitsui Cons 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sumitomo Mitsui may actually be approaching a critical reversion point that can send shares even higher in January 2025.

China BlueChemical and Sumitomo Mitsui Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China BlueChemical and Sumitomo Mitsui

The main advantage of trading using opposite China BlueChemical and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Sumitomo Mitsui 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 Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.
The idea behind China BlueChemical and Sumitomo Mitsui Construction 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.
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

Other Complementary Tools

Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes