Correlation Between Beazley PLC and Fuji Media

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

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

Diversification Opportunities for Beazley PLC and Fuji Media

0.22

Correlation Coefficient

Beazley PLC  Fuji Media

Modest diversification

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

Pair Corralation between Beazley PLC and Fuji Media

Assuming the 90 days horizon Beazley PLC is expected to generate 6.18 times less return on investment than Fuji Media. But when comparing it to its historical volatility, Beazley PLC is 1.66 times less risky than Fuji Media. It trades about 0.03 of its potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Fuji Media Holdings on December 20, 2024 and sell it today you would earn a total of  300.00  from holding Fuji Media Holdings or generate 26.79% return on investment over 90 days.

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

Beazley PLC  vs.  Fuji Media Holdings

Beazley PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beazley PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Beazley PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fuji Media Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Fuji Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beazley PLC and Fuji Media

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

The idea behind Beazley PLC and Fuji Media Holdings 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.