Correlation Between FUTURE GAMING and Fukuyama Transporting

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

By analyzing existing cross correlation between FUTURE GAMING GRP and Fukuyama Transporting Co, you can compare the effects of market volatilities on FUTURE GAMING and Fukuyama Transporting 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 FUTURE GAMING with a short position of Fukuyama Transporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURE GAMING and Fukuyama Transporting.

Diversification Opportunities for FUTURE GAMING and Fukuyama Transporting

-0.06

Correlation Coefficient

FUTURE GAMING  Fukuyama Transporting

Good diversification

The 3 months correlation between FUTURE and Fukuyama is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding FUTURE GAMING GRP and Fukuyama Transporting Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fukuyama Transporting and FUTURE GAMING 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 FUTURE GAMING GRP are associated (or correlated) with Fukuyama Transporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fukuyama Transporting has no effect on the direction of FUTURE GAMING i.e., FUTURE GAMING and Fukuyama Transporting go up and down completely randomly.

Pair Corralation between FUTURE GAMING and Fukuyama Transporting

Assuming the 90 days trading horizon FUTURE GAMING GRP is expected to generate 3.21 times more return on investment than Fukuyama Transporting. However, FUTURE GAMING is 3.21 times more volatile than Fukuyama Transporting Co. It trades about 0.05 of its potential returns per unit of risk. Fukuyama Transporting Co is currently generating about 0.01 per unit of risk. If you would invest  41.00  in FUTURE GAMING GRP on September 20, 2024 and sell it today you would earn a total of  10.00  from holding FUTURE GAMING GRP or generate 24.39% return on investment over 90 days.

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

FUTURE GAMING GRP  vs.  Fukuyama Transporting Co

FUTURE GAMING GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FUTURE GAMING GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fukuyama Transporting

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FUTURE GAMING and Fukuyama Transporting

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

The idea behind FUTURE GAMING GRP and Fukuyama Transporting Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.