Correlation Between Gemfields Group and Sumitomo

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

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

Diversification Opportunities for Gemfields Group and Sumitomo

-0.14

Correlation Coefficient

Gemfields Group  Sumitomo

Good diversification

The 3 months correlation between Gemfields and Sumitomo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gemfields Group Limited and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo and Gemfields Group 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 Gemfields Group Limited are associated (or correlated) with Sumitomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo has no effect on the direction of Gemfields Group i.e., Gemfields Group and Sumitomo go up and down completely randomly.

Pair Corralation between Gemfields Group and Sumitomo

Assuming the 90 days horizon Gemfields Group Limited is expected to generate 6.87 times more return on investment than Sumitomo. However, Gemfields Group is 6.87 times more volatile than Sumitomo. It trades about 0.09 of its potential returns per unit of risk. Sumitomo is currently generating about 0.06 per unit of risk. If you would invest  4.80  in Gemfields Group Limited on April 20, 2025 and sell it today you would earn a total of  1.45  from holding Gemfields Group Limited or generate 30.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gemfields Group Limited  vs.  Sumitomo

Gemfields Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gemfields Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gemfields Group reported solid returns over the last few months and may actually be approaching a breakup point.

Sumitomo

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Gemfields Group and Sumitomo

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

The idea behind Gemfields Group Limited and Sumitomo 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.