Correlation Between FUJITSU and Talanx AG

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

Diversification Opportunities for FUJITSU and Talanx AG

-0.08

Correlation Coefficient

FUJITSU  Talanx AG

Good diversification

The 3 months correlation between FUJITSU and Talanx is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding FUJITSU LTD ADR and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of FUJITSU i.e., FUJITSU and Talanx AG go up and down completely randomly.

Pair Corralation between FUJITSU and Talanx AG

Assuming the 90 days trading horizon FUJITSU LTD ADR is expected to generate 1.55 times more return on investment than Talanx AG. However, FUJITSU is 1.55 times more volatile than Talanx AG. It trades about 0.03 of its potential returns per unit of risk. Talanx AG is currently generating about 0.02 per unit of risk. If you would invest  1,730  in FUJITSU LTD ADR on September 3, 2024 and sell it today you would earn a total of  50.00  from holding FUJITSU LTD ADR or generate 2.89% return on investment over 90 days.

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

FUJITSU LTD ADR  vs.  Talanx AG

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Talanx AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Talanx AG 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 Talanx AG

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

The idea behind FUJITSU LTD ADR and Talanx AG 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.