Correlation Between Fuji Media and Biogen

Can any of the company-specific risk be diversified away by investing in both Fuji Media and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Fuji Media and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuji Media and Biogen.

Diversification Opportunities for Fuji Media and Biogen

-0.32

Correlation Coefficient

Fuji Media  Biogen

Very good diversification

The 3 months correlation between Fuji and Biogen is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Media Holdings and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Fuji Media i.e., Fuji Media and Biogen go up and down completely randomly.

Pair Corralation between Fuji Media and Biogen

Assuming the 90 days trading horizon Fuji Media Holdings is expected to generate 1.24 times more return on investment than Biogen. However, Fuji Media is 1.24 times more volatile than Biogen Inc. It trades about 0.08 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.21 per unit of risk. If you would invest  1,010  in Fuji Media Holdings on October 24, 2024 and sell it today you would earn a total of  100.00  from holding Fuji Media Holdings or generate 9.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Fuji Media Holdings  vs.  Biogen Inc

Fuji Media Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fuji Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fuji Media and Biogen

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

The idea behind Fuji Media Holdings and Biogen Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.