Correlation Between Fuji Media and DENSO CORP

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

By analyzing existing cross correlation between Fuji Media Holdings and DENSO P ADR, you can compare the effects of market volatilities on Fuji Media and DENSO CORP 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 Fuji Media with a short position of DENSO CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuji Media and DENSO CORP.

Diversification Opportunities for Fuji Media and DENSO CORP

-0.16

Correlation Coefficient

Fuji Media  DENSO CORP

Good diversification

The 3 months correlation between Fuji and DENSO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Media Holdings and DENSO P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENSO P ADR and Fuji Media 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 Fuji Media Holdings are associated (or correlated) with DENSO CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENSO P ADR has no effect on the direction of Fuji Media i.e., Fuji Media and DENSO CORP go up and down completely randomly.

Pair Corralation between Fuji Media and DENSO CORP

Assuming the 90 days trading horizon Fuji Media Holdings is expected to under-perform the DENSO CORP. In addition to that, Fuji Media is 1.14 times more volatile than DENSO P ADR. It trades about -0.07 of its total potential returns per unit of risk. DENSO P ADR is currently generating about 0.01 per unit of volatility. If you would invest  1,330  in DENSO P ADR on October 8, 2024 and sell it today you would earn a total of  0.00  from holding DENSO P ADR or generate 0.0% return on investment over 90 days.

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

Fuji Media Holdings  vs.  DENSO P ADR

Fuji Media Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fuji Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fuji Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

DENSO P ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DENSO P ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DENSO CORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fuji Media and DENSO CORP

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

The idea behind Fuji Media Holdings and DENSO P ADR 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.