Correlation Between FUYO GENERAL and PREMIER FOODS

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

Diversification Opportunities for FUYO GENERAL and PREMIER FOODS

FUYOPREMIERDiversified AwayFUYOPREMIERDiversified Away100%
0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between FUYO and PREMIER is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and PREMIER FOODS go up and down completely randomly.

Pair Corralation between FUYO GENERAL and PREMIER FOODS

Assuming the 90 days horizon FUYO GENERAL is expected to generate 1.24 times less return on investment than PREMIER FOODS. But when comparing it to its historical volatility, FUYO GENERAL LEASE is 1.15 times less risky than PREMIER FOODS. It trades about 0.05 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  220.00  in PREMIER FOODS on November 19, 2024 and sell it today you would earn a total of  8.00  from holding PREMIER FOODS or generate 3.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FUYO GENERAL LEASE  vs.  PREMIER FOODS

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15FXL FOJ1
       Timeline  
FUYO GENERAL LEASE 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FUYO GENERAL LEASE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FUYO GENERAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb676869707172
PREMIER FOODS 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PREMIER FOODS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.12.152.22.252.32.35

FUYO GENERAL and PREMIER FOODS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.9-2.92-1.94-0.960.010.991.992.994.0 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15FXL FOJ1
       Returns  

Pair Trading with FUYO GENERAL and PREMIER FOODS

The main advantage of trading using opposite FUYO GENERAL and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.
The idea behind FUYO GENERAL LEASE and PREMIER FOODS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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