Correlation Between Fukuyama Transporting and Transportadora

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

By analyzing existing cross correlation between Fukuyama Transporting Co and Transportadora de Gas, you can compare the effects of market volatilities on Fukuyama Transporting and Transportadora 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 Fukuyama Transporting with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fukuyama Transporting and Transportadora.

Diversification Opportunities for Fukuyama Transporting and Transportadora

0.18

Correlation Coefficient

Fukuyama Transporting  Transportadora

Average diversification

The 3 months correlation between Fukuyama and Transportadora is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fukuyama Transporting Co and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and Fukuyama Transporting 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 Fukuyama Transporting Co are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Fukuyama Transporting i.e., Fukuyama Transporting and Transportadora go up and down completely randomly.

Pair Corralation between Fukuyama Transporting and Transportadora

Assuming the 90 days horizon Fukuyama Transporting Co is expected to generate 0.27 times more return on investment than Transportadora. However, Fukuyama Transporting Co is 3.73 times less risky than Transportadora. It trades about -0.05 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.04 per unit of risk. If you would invest  2,340  in Fukuyama Transporting Co on November 29, 2024 and sell it today you would lose (100.00) from holding Fukuyama Transporting Co or give up 4.27% of portfolio value over 90 days.

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

Fukuyama Transporting Co  vs.  Transportadora de Gas

Fukuyama Transporting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fukuyama Transporting Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fukuyama Transporting is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fukuyama Transporting and Transportadora

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

The idea behind Fukuyama Transporting Co and Transportadora de Gas 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.