Correlation Between BC IRON and Fuji Media

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

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

Diversification Opportunities for BC IRON and Fuji Media

-0.24

Correlation Coefficient

BC IRON  Fuji Media

Very good diversification

The 3 months correlation between BC3 and Fuji is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON 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 BC IRON 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 BC IRON 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 BC IRON i.e., BC IRON and Fuji Media go up and down completely randomly.

Pair Corralation between BC IRON and Fuji Media

Assuming the 90 days trading horizon BC IRON is expected to generate 2.34 times less return on investment than Fuji Media. In addition to that, BC IRON is 1.82 times more volatile than Fuji Media Holdings. It trades about 0.01 of its total potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.06 per unit of volatility. If you would invest  730.00  in Fuji Media Holdings on October 25, 2024 and sell it today you would earn a total of  460.00  from holding Fuji Media Holdings or generate 63.01% return on investment over 90 days.

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

BC IRON  vs.  Fuji Media Holdings

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BC IRON is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fuji Media Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 11 (%) 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 BC IRON and Fuji Media

The main advantage of trading using opposite BC IRON and Fuji Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON 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 BC IRON 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.