Correlation Between Sumitomo Chemical and Martin Marietta

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

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

Diversification Opportunities for Sumitomo Chemical and Martin Marietta

0.22

Correlation Coefficient

Sumitomo Chemical  Martin Marietta

Modest diversification

The 3 months correlation between Sumitomo and Martin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Sumitomo Chemical 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 Chemical are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Martin Marietta go up and down completely randomly.

Pair Corralation between Sumitomo Chemical and Martin Marietta

Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the Martin Marietta. In addition to that, Sumitomo Chemical is 1.32 times more volatile than Martin Marietta Materials. It trades about -0.05 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.05 per unit of volatility. If you would invest  45,065  in Martin Marietta Materials on March 26, 2025 and sell it today you would earn a total of  2,435  from holding Martin Marietta Materials or generate 5.4% return on investment over 90 days.

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

Sumitomo Chemical  vs.  Martin Marietta Materials

Sumitomo Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sumitomo Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Martin Marietta Materials

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Sumitomo Chemical and Martin Marietta

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

The idea behind Sumitomo Chemical and Martin Marietta Materials 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.