Correlation Between Fujitsu and Secom Co

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

By analyzing existing cross correlation between Fujitsu Ltd ADR and Secom Co Ltd, you can compare the effects of market volatilities on Fujitsu and Secom Co 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 Secom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujitsu and Secom Co.

Diversification Opportunities for Fujitsu and Secom Co

0.69

Correlation Coefficient

Fujitsu  Secom Co

Poor diversification

The 3 months correlation between Fujitsu and Secom is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fujitsu Ltd ADR and Secom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secom Co 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 Ltd ADR are associated (or correlated) with Secom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secom Co has no effect on the direction of Fujitsu i.e., Fujitsu and Secom Co go up and down completely randomly.

Pair Corralation between Fujitsu and Secom Co

Assuming the 90 days horizon Fujitsu is expected to generate 3.32 times less return on investment than Secom Co. In addition to that, Fujitsu is 1.31 times more volatile than Secom Co Ltd. It trades about 0.04 of its total potential returns per unit of risk. Secom Co Ltd is currently generating about 0.18 per unit of volatility. If you would invest  834.00  in Secom Co Ltd on September 18, 2024 and sell it today you would earn a total of  31.00  from holding Secom Co Ltd or generate 3.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Fujitsu Ltd ADR  vs.  Secom Co Ltd

Fujitsu Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fujitsu Ltd ADR 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.

Secom Co

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fujitsu and Secom Co

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

The idea behind Fujitsu Ltd ADR and Secom Co Ltd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.