Correlation Between Sumitomo Mitsui and GEAR4MUSIC (HLDGS)

Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on Sumitomo Mitsui and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS). Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and GEAR4MUSIC (HLDGS).

Diversification Opportunities for Sumitomo Mitsui and GEAR4MUSIC (HLDGS)

0.28

Correlation Coefficient

Sumitomo Mitsui  GEAR4MUSIC (HLDGS)

Modest diversification

The 3 months correlation between Sumitomo and GEAR4MUSIC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC (HLDGS) has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and GEAR4MUSIC (HLDGS) go up and down completely randomly.

Pair Corralation between Sumitomo Mitsui and GEAR4MUSIC (HLDGS)

Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 4.49 times less return on investment than GEAR4MUSIC (HLDGS). But when comparing it to its historical volatility, Sumitomo Mitsui Construction is 1.78 times less risky than GEAR4MUSIC (HLDGS). It trades about 0.09 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  148.00  in GEAR4MUSIC LS 10 on April 25, 2025 and sell it today you would earn a total of  102.00  from holding GEAR4MUSIC LS 10 or generate 68.92% return on investment over 90 days.

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

Sumitomo Mitsui Construction  vs.  GEAR4MUSIC LS 10

Sumitomo Mitsui Cons

Risk-Adjusted Performance

Modest

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

GEAR4MUSIC (HLDGS)

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GEAR4MUSIC LS 10 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GEAR4MUSIC (HLDGS) reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sumitomo Mitsui and GEAR4MUSIC (HLDGS)

The main advantage of trading using opposite Sumitomo Mitsui and GEAR4MUSIC (HLDGS) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) will offset losses from the drop in GEAR4MUSIC (HLDGS)'s long position.

The idea behind Sumitomo Mitsui Construction and GEAR4MUSIC LS 10 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.