Correlation Between Furukawa Electric and Cns Pharmaceuticals

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

By analyzing existing cross correlation between Furukawa Electric Co and Cns Pharmaceuticals, you can compare the effects of market volatilities on Furukawa Electric and Cns Pharmaceuticals 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 Furukawa Electric with a short position of Cns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Furukawa Electric and Cns Pharmaceuticals.

Diversification Opportunities for Furukawa Electric and Cns Pharmaceuticals

-0.49

Correlation Coefficient

Furukawa Electric  Cns Pharmaceuticals

Very good diversification

The 3 months correlation between Furukawa and Cns is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Furukawa Electric Co and Cns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cns Pharmaceuticals and Furukawa Electric 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 Furukawa Electric Co are associated (or correlated) with Cns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cns Pharmaceuticals has no effect on the direction of Furukawa Electric i.e., Furukawa Electric and Cns Pharmaceuticals go up and down completely randomly.

Pair Corralation between Furukawa Electric and Cns Pharmaceuticals

If you would invest  10.00  in Cns Pharmaceuticals on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Cns Pharmaceuticals or generate 20.0% return on investment over 90 days.

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

Furukawa Electric Co  vs.  Cns Pharmaceuticals

Furukawa Electric

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Furukawa Electric Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Furukawa Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Cns Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cns Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cns Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Furukawa Electric and Cns Pharmaceuticals

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

The idea behind Furukawa Electric Co and Cns Pharmaceuticals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.