Correlation Between Air Transport and Fuji Media

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

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

Diversification Opportunities for Air Transport and Fuji Media

0.18

Correlation Coefficient

Air Transport  Fuji Media

Average diversification

The 3 months correlation between Air and Fuji is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Fuji Media go up and down completely randomly.

Pair Corralation between Air Transport and Fuji Media

Assuming the 90 days horizon Air Transport Services is expected to generate 1.95 times more return on investment than Fuji Media. However, Air Transport is 1.95 times more volatile than Fuji Media Holdings. It trades about 0.23 of its potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.02 per unit of risk. If you would invest  1,370  in Air Transport Services on October 8, 2024 and sell it today you would earn a total of  750.00  from holding Air Transport Services or generate 54.74% return on investment over 90 days.

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

Air Transport Services  vs.  Fuji Media Holdings

Air Transport Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Fuji Media Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fuji Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Air Transport and Fuji Media

The main advantage of trading using opposite Air Transport and Fuji Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.