Correlation Between Fanuc and Aumann AG

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

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

Diversification Opportunities for Fanuc and Aumann AG

0.54

Correlation Coefficient

Fanuc  Aumann AG

Very weak diversification

The 3 months correlation between Fanuc and Aumann is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG 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 Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Fanuc i.e., Fanuc and Aumann AG go up and down completely randomly.

Pair Corralation between Fanuc and Aumann AG

Assuming the 90 days horizon Fanuc is expected to under-perform the Aumann AG. In addition to that, Fanuc is 1.83 times more volatile than Aumann AG. It trades about -0.07 of its total potential returns per unit of risk. Aumann AG is currently generating about -0.11 per unit of volatility. If you would invest  1,396  in Aumann AG on September 3, 2024 and sell it today you would lose (96.00) from holding Aumann AG or give up 6.88% of portfolio value over 90 days.

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

Fanuc  vs.  Aumann AG

Fanuc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aumann AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aumann AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Fanuc and Aumann AG

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

The idea behind Fanuc and Aumann AG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.