Correlation Between FIRST SHIP and Sumitomo Mitsui

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

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

Diversification Opportunities for FIRST SHIP and Sumitomo Mitsui

0.11

Correlation Coefficient

FIRST SHIP  Sumitomo Mitsui

Average diversification

The 3 months correlation between FIRST and Sumitomo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE 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 FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and Sumitomo Mitsui go up and down completely randomly.

Pair Corralation between FIRST SHIP and Sumitomo Mitsui

Assuming the 90 days horizon FIRST SHIP is expected to generate 1.73 times less return on investment than Sumitomo Mitsui. In addition to that, FIRST SHIP is 1.39 times more volatile than Sumitomo Mitsui Construction. It trades about 0.03 of its total potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about 0.08 per unit of volatility. If you would invest  306.00  in Sumitomo Mitsui Construction on April 23, 2025 and sell it today you would earn a total of  32.00  from holding Sumitomo Mitsui Construction or generate 10.46% return on investment over 90 days.

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

FIRST SHIP LEASE  vs.  Sumitomo Mitsui Construction

FIRST SHIP LEASE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SHIP LEASE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FIRST SHIP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sumitomo Mitsui may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with FIRST SHIP and Sumitomo Mitsui

The main advantage of trading using opposite FIRST SHIP and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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 FIRST SHIP LEASE 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.