Correlation Between Cardinal Health and FUYO GENERAL

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

By analyzing existing cross correlation between Cardinal Health and FUYO GENERAL LEASE, you can compare the effects of market volatilities on Cardinal Health and FUYO GENERAL 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 Cardinal Health with a short position of FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and FUYO GENERAL.

Diversification Opportunities for Cardinal Health and FUYO GENERAL

0.31

Correlation Coefficient

Cardinal Health  FUYO GENERAL

Weak diversification

The 3 months correlation between Cardinal and FUYO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE and Cardinal Health 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 Cardinal Health are associated (or correlated) with FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of Cardinal Health i.e., Cardinal Health and FUYO GENERAL go up and down completely randomly.

Pair Corralation between Cardinal Health and FUYO GENERAL

Assuming the 90 days horizon Cardinal Health is expected to under-perform the FUYO GENERAL. In addition to that, Cardinal Health is 1.26 times more volatile than FUYO GENERAL LEASE. It trades about -0.05 of its total potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.09 per unit of volatility. If you would invest  6,750  in FUYO GENERAL LEASE on September 19, 2024 and sell it today you would earn a total of  150.00  from holding FUYO GENERAL LEASE or generate 2.22% return on investment over 90 days.

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

Cardinal Health  vs.  FUYO GENERAL LEASE

Cardinal Health

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FUYO GENERAL LEASE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FUYO GENERAL LEASE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FUYO GENERAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cardinal Health and FUYO GENERAL

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

The idea behind Cardinal Health and FUYO GENERAL LEASE 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.