Correlation Between FUYO GENERAL and PulteGroup

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

Diversification Opportunities for FUYO GENERAL and PulteGroup

-0.6

Correlation Coefficient

FUYO GENERAL  PulteGroup

Excellent diversification

The 3 months correlation between FUYO and PulteGroup is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and PulteGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PulteGroup 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 PulteGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PulteGroup has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and PulteGroup go up and down completely randomly.

Pair Corralation between FUYO GENERAL and PulteGroup

Assuming the 90 days horizon FUYO GENERAL LEASE is expected to generate 0.57 times more return on investment than PulteGroup. However, FUYO GENERAL LEASE is 1.74 times less risky than PulteGroup. It trades about 0.04 of its potential returns per unit of risk. PulteGroup is currently generating about -0.05 per unit of risk. If you would invest  6,950  in FUYO GENERAL LEASE on December 21, 2024 and sell it today you would earn a total of  200.00  from holding FUYO GENERAL LEASE or generate 2.88% return on investment over 90 days.

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

FUYO GENERAL LEASE  vs.  PulteGroup

FUYO GENERAL LEASE

Risk-Adjusted Performance

Insignificant

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

PulteGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days PulteGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FUYO GENERAL and PulteGroup

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

The idea behind FUYO GENERAL LEASE and PulteGroup 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.