Correlation Between CENTURIA OFFICE and Sumitomo Chemical

Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and Sumitomo Chemical 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 CENTURIA OFFICE and Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CENTURIA OFFICE REIT and Sumitomo Chemical, you can compare the effects of market volatilities on CENTURIA OFFICE and Sumitomo Chemical 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 CENTURIA OFFICE with a short position of Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Sumitomo Chemical.

Diversification Opportunities for CENTURIA OFFICE and Sumitomo Chemical

0.69

Correlation Coefficient

CENTURIA OFFICE  Sumitomo Chemical

Poor diversification

The 3 months correlation between CENTURIA and Sumitomo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and Sumitomo Chemical go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Sumitomo Chemical

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the Sumitomo Chemical. In addition to that, CENTURIA OFFICE is 1.31 times more volatile than Sumitomo Chemical. It trades about -0.03 of its total potential returns per unit of risk. Sumitomo Chemical is currently generating about 0.07 per unit of volatility. If you would invest  204.00  in Sumitomo Chemical on April 19, 2025 and sell it today you would earn a total of  4.00  from holding Sumitomo Chemical or generate 1.96% return on investment over 90 days.

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

CENTURIA OFFICE REIT  vs.  Sumitomo Chemical

CENTURIA OFFICE REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CENTURIA OFFICE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sumitomo Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sumitomo Chemical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CENTURIA OFFICE and Sumitomo Chemical

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

The idea behind CENTURIA OFFICE REIT and Sumitomo Chemical 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.