Correlation Between Sumitomo Corp and FUJIFILM Holdings

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

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

Diversification Opportunities for Sumitomo Corp and FUJIFILM Holdings

0.66

Correlation Coefficient

Sumitomo Corp  FUJIFILM Holdings

Poor diversification

The 3 months correlation between Sumitomo and FUJIFILM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Corp ADR and FUJIFILM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJIFILM Holdings Corp and Sumitomo Corp 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 Corp ADR are associated (or correlated) with FUJIFILM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJIFILM Holdings Corp has no effect on the direction of Sumitomo Corp i.e., Sumitomo Corp and FUJIFILM Holdings go up and down completely randomly.

Pair Corralation between Sumitomo Corp and FUJIFILM Holdings

If you would invest  2,356  in Sumitomo Corp ADR on February 2, 2024 and sell it today you would earn a total of  427.00  from holding Sumitomo Corp ADR or generate 18.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.35%
Values	Daily Returns

Sumitomo Corp ADR  vs.  FUJIFILM Holdings Corp

Sumitomo Corp ADR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Corp ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Sumitomo Corp showed solid returns over the last few months and may actually be approaching a breakup point.

FUJIFILM Holdings Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days FUJIFILM Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak forward indicators, FUJIFILM Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Sumitomo Corp and FUJIFILM Holdings

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

The idea behind Sumitomo Corp ADR and FUJIFILM Holdings Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.