Correlation Between Daifuku and Fanuc

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

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

Diversification Opportunities for Daifuku and Fanuc

0.11

Correlation Coefficient

Daifuku  Fanuc

Average diversification

The 3 months correlation between Daifuku and Fanuc is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Daifuku Co and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc and Daifuku 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 Daifuku Co are associated (or correlated) with Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of Daifuku i.e., Daifuku and Fanuc go up and down completely randomly.

Pair Corralation between Daifuku and Fanuc

Assuming the 90 days horizon Daifuku Co is expected to under-perform the Fanuc. In addition to that, Daifuku is 1.58 times more volatile than Fanuc. It trades about -0.33 of its total potential returns per unit of risk. Fanuc is currently generating about 0.04 per unit of volatility. If you would invest  2,572  in Fanuc on September 5, 2024 and sell it today you would earn a total of  108.00  from holding Fanuc or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Daifuku Co  vs.  Fanuc

Daifuku

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fanuc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fanuc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Daifuku and Fanuc

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

The idea behind Daifuku Co and Fanuc 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.