Correlation Between Fukuoka Financial and ONEOK

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

By analyzing existing cross correlation between Fukuoka Financial Group and ONEOK Inc, you can compare the effects of market volatilities on Fukuoka Financial and ONEOK 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 Fukuoka Financial with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fukuoka Financial and ONEOK.

Diversification Opportunities for Fukuoka Financial and ONEOK

0.81

Correlation Coefficient

Fukuoka Financial  ONEOK

Very poor diversification

The 3 months correlation between Fukuoka and ONEOK is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fukuoka Financial Group and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Fukuoka Financial 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 Fukuoka Financial Group are associated (or correlated) with ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of Fukuoka Financial i.e., Fukuoka Financial and ONEOK go up and down completely randomly.

Pair Corralation between Fukuoka Financial and ONEOK

Assuming the 90 days horizon Fukuoka Financial Group is expected to under-perform the ONEOK. But the stock apears to be less risky and, when comparing its historical volatility, Fukuoka Financial Group is 1.31 times less risky than ONEOK. The stock trades about -0.58 of its potential returns per unit of risk. The ONEOK Inc is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest  10,540  in ONEOK Inc on October 1, 2024 and sell it today you would lose (905.00) from holding ONEOK Inc or give up 8.59% of portfolio value over 90 days.

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

Fukuoka Financial Group  vs.  ONEOK Inc

Fukuoka Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fukuoka Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fukuoka Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ONEOK Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONEOK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fukuoka Financial and ONEOK

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

The idea behind Fukuoka Financial Group and ONEOK Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.