Correlation Between Fukuoka Financial and Rock Tech

Can any of the company-specific risk be diversified away by investing in both Fukuoka Financial and Rock Tech 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 Rock Tech 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 Rock Tech Lithium, you can compare the effects of market volatilities on Fukuoka Financial and Rock Tech 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 Rock Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fukuoka Financial and Rock Tech.

Diversification Opportunities for Fukuoka Financial and Rock Tech

-0.1

Correlation Coefficient

Fukuoka Financial  Rock Tech

Good diversification

The 3 months correlation between Fukuoka and Rock is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fukuoka Financial Group and Rock Tech Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Tech Lithium 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 Rock Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Tech Lithium has no effect on the direction of Fukuoka Financial i.e., Fukuoka Financial and Rock Tech go up and down completely randomly.

Pair Corralation between Fukuoka Financial and Rock Tech

Assuming the 90 days horizon Fukuoka Financial is expected to generate 2.3 times less return on investment than Rock Tech. But when comparing it to its historical volatility, Fukuoka Financial Group is 4.11 times less risky than Rock Tech. It trades about 0.11 of its potential returns per unit of risk. Rock Tech Lithium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Rock Tech Lithium on December 28, 2024 and sell it today you would earn a total of  8.00  from holding Rock Tech Lithium or generate 11.76% return on investment over 90 days.

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

Fukuoka Financial Group  vs.  Rock Tech Lithium

Fukuoka Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fukuoka Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fukuoka Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rock Tech Lithium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rock Tech Lithium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Rock Tech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fukuoka Financial and Rock Tech

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

The idea behind Fukuoka Financial Group and Rock Tech Lithium 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.