Correlation Between Fanuc and Dear Cashmere

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

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

Diversification Opportunities for Fanuc and Dear Cashmere

-0.27

Correlation Coefficient

Fanuc  Dear Cashmere

Very good diversification

The 3 months correlation between Fanuc and Dear is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and Fanuc 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 Fanuc are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Fanuc i.e., Fanuc and Dear Cashmere go up and down completely randomly.

Pair Corralation between Fanuc and Dear Cashmere

Assuming the 90 days horizon Fanuc is expected to generate 0.48 times more return on investment than Dear Cashmere. However, Fanuc is 2.06 times less risky than Dear Cashmere. It trades about 0.05 of its potential returns per unit of risk. Dear Cashmere Holding is currently generating about -0.06 per unit of risk. If you would invest  2,512  in Fanuc on December 27, 2024 and sell it today you would earn a total of  213.00  from holding Fanuc or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Fanuc  vs.  Dear Cashmere Holding

Fanuc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fanuc reported solid returns over the last few months and may actually be approaching a breakup point.

Dear Cashmere Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Fanuc and Dear Cashmere

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

The idea behind Fanuc and Dear Cashmere Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.