Correlation Between BII Railway and FUJITSU

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

By analyzing existing cross correlation between BII Railway Transportation and FUJITSU LTD ADR, you can compare the effects of market volatilities on BII Railway and FUJITSU 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 BII Railway with a short position of FUJITSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and FUJITSU.

Diversification Opportunities for BII Railway and FUJITSU

0.56

Correlation Coefficient

BII Railway  FUJITSU

Very weak diversification

The 3 months correlation between BII and FUJITSU is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR and BII Railway 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 BII Railway Transportation are associated (or correlated) with FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of BII Railway i.e., BII Railway and FUJITSU go up and down completely randomly.

Pair Corralation between BII Railway and FUJITSU

Assuming the 90 days horizon BII Railway is expected to generate 3.56 times less return on investment than FUJITSU. In addition to that, BII Railway is 1.82 times more volatile than FUJITSU LTD ADR. It trades about 0.01 of its total potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.05 per unit of volatility. If you would invest  1,199  in FUJITSU LTD ADR on December 2, 2024 and sell it today you would earn a total of  631.00  from holding FUJITSU LTD ADR or generate 52.63% return on investment over 90 days.

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

BII Railway Transportation  vs.  FUJITSU LTD ADR

BII Railway Transpor

Risk-Adjusted Performance

OK

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

FUJITSU LTD ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FUJITSU LTD ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, FUJITSU is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BII Railway and FUJITSU

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

The idea behind BII Railway Transportation and FUJITSU LTD ADR 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 Stocks Directory module to find actively traded stocks across global markets.