Correlation Between SUMITOMO CORP and Fanuc

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

By analyzing existing cross correlation between SUMITOMO P SP and Fanuc, you can compare the effects of market volatilities on SUMITOMO CORP and Fanuc 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 Fanuc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUMITOMO CORP and Fanuc.

Diversification Opportunities for SUMITOMO CORP and Fanuc

0.79

Correlation Coefficient

SUMITOMO CORP  Fanuc

Poor diversification

The 3 months correlation between SUMITOMO and Fanuc is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO P SP and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc 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 P SP are associated (or correlated) with Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of SUMITOMO CORP i.e., SUMITOMO CORP and Fanuc go up and down completely randomly.

Pair Corralation between SUMITOMO CORP and Fanuc

Assuming the 90 days trading horizon SUMITOMO P SP is expected to generate 0.61 times more return on investment than Fanuc. However, SUMITOMO P SP is 1.64 times less risky than Fanuc. It trades about 0.06 of its potential returns per unit of risk. Fanuc is currently generating about 0.0 per unit of risk. If you would invest  2,040  in SUMITOMO P SP on April 23, 2025 and sell it today you would earn a total of  80.00  from holding SUMITOMO P SP or generate 3.92% return on investment over 90 days.

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

SUMITOMO P SP  vs.  Fanuc

SUMITOMO P SP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SUMITOMO P SP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, SUMITOMO CORP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fanuc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fanuc is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SUMITOMO CORP and Fanuc

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

The idea behind SUMITOMO P SP and Fanuc 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 Anywhere module to track or share privately all of your investments from the convenience of any device.