Correlation Between FUJITSU and Data3

Can any of the company-specific risk be diversified away by investing in both FUJITSU and Data3 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 Data3 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 Data3 Limited, you can compare the effects of market volatilities on FUJITSU and Data3 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 Data3. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUJITSU and Data3.

Diversification Opportunities for FUJITSU and Data3

-0.11

Correlation Coefficient

FUJITSU  Data3

Good diversification

The 3 months correlation between FUJITSU and Data3 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding FUJITSU LTD ADR and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 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 LTD ADR are associated (or correlated) with Data3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of FUJITSU i.e., FUJITSU and Data3 go up and down completely randomly.

Pair Corralation between FUJITSU and Data3

Assuming the 90 days trading horizon FUJITSU LTD ADR is expected to generate 1.09 times more return on investment than Data3. However, FUJITSU is 1.09 times more volatile than Data3 Limited. It trades about 0.28 of its potential returns per unit of risk. Data3 Limited is currently generating about 0.15 per unit of risk. If you would invest  1,600  in FUJITSU LTD ADR on September 5, 2024 and sell it today you would earn a total of  190.00  from holding FUJITSU LTD ADR or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

FUJITSU LTD ADR  vs.  Data3 Limited

FUJITSU LTD ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FUJITSU LTD ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, FUJITSU is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Data3 Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Data3 Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Data3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FUJITSU and Data3

The main advantage of trading using opposite FUJITSU and Data3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUJITSU position performs unexpectedly, Data3 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 Data3 will offset losses from the drop in Data3's long position.

The idea behind FUJITSU LTD ADR and Data3 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.