Correlation Between FUYO GENERAL and GFL ENVIRONM

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

By analyzing existing cross correlation between FUYO GENERAL LEASE and GFL ENVIRONM, you can compare the effects of market volatilities on FUYO GENERAL and GFL ENVIRONM 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 FUYO GENERAL with a short position of GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and GFL ENVIRONM.

Diversification Opportunities for FUYO GENERAL and GFL ENVIRONM

0.59

Correlation Coefficient

FUYO GENERAL  GFL ENVIRONM

Very weak diversification

The 3 months correlation between FUYO and GFL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and FUYO GENERAL 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 FUYO GENERAL LEASE are associated (or correlated) with GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and GFL ENVIRONM go up and down completely randomly.

Pair Corralation between FUYO GENERAL and GFL ENVIRONM

Assuming the 90 days horizon FUYO GENERAL LEASE is expected to under-perform the GFL ENVIRONM. But the stock apears to be less risky and, when comparing its historical volatility, FUYO GENERAL LEASE is 1.25 times less risky than GFL ENVIRONM. The stock trades about -0.02 of its potential returns per unit of risk. The GFL ENVIRONM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,975  in GFL ENVIRONM on October 7, 2024 and sell it today you would earn a total of  1,345  from holding GFL ENVIRONM or generate 45.21% return on investment over 90 days.

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

FUYO GENERAL LEASE  vs.  GFL ENVIRONM

FUYO GENERAL LEASE

Risk-Adjusted Performance

6 of 100

Modest

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

GFL ENVIRONM

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with FUYO GENERAL and GFL ENVIRONM

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

The idea behind FUYO GENERAL LEASE and GFL ENVIRONM 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.