Correlation Between Fujitsu and Appen

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

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

Diversification Opportunities for Fujitsu and Appen

0.0

Correlation Coefficient

Fujitsu  Appen

Pay attention - limited upside

The 3 months correlation between Fujitsu and Appen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fujitsu Limited and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and Fujitsu 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 Fujitsu Limited are associated (or correlated) with Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen Limited has no effect on the direction of Fujitsu i.e., Fujitsu and Appen go up and down completely randomly.

Pair Corralation between Fujitsu and Appen

Assuming the 90 days horizon Fujitsu Limited is expected to generate 1.8 times more return on investment than Appen. However, Fujitsu is 1.8 times more volatile than Appen Limited. It trades about 0.02 of its potential returns per unit of risk. Appen Limited is currently generating about -0.02 per unit of risk. If you would invest  1,736  in Fujitsu Limited on September 28, 2024 and sell it today you would lose (133.00) from holding Fujitsu Limited or give up 7.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Fujitsu Limited  vs.  Appen Limited

Fujitsu Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Appen Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Appen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fujitsu and Appen

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

The idea behind Fujitsu Limited and Appen Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.