Correlation Between Fanuc and Amaero International

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

By analyzing existing cross correlation between Fanuc and Amaero International, you can compare the effects of market volatilities on Fanuc and Amaero International 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 Amaero International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanuc and Amaero International.

Diversification Opportunities for Fanuc and Amaero International

0.15

Correlation Coefficient

Fanuc  Amaero International

Average diversification

The 3 months correlation between Fanuc and Amaero is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Amaero International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaero International 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 Amaero International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaero International has no effect on the direction of Fanuc i.e., Fanuc and Amaero International go up and down completely randomly.

Pair Corralation between Fanuc and Amaero International

Assuming the 90 days horizon Fanuc is expected to generate 4.11 times less return on investment than Amaero International. But when comparing it to its historical volatility, Fanuc is 5.22 times less risky than Amaero International. It trades about 0.11 of its potential returns per unit of risk. Amaero International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Amaero International on December 29, 2024 and sell it today you would earn a total of  4.00  from holding Amaero International or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Fanuc  vs.  Amaero International

Fanuc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Fanuc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amaero International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amaero International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Amaero International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fanuc and Amaero International

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

The idea behind Fanuc and Amaero International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.