Correlation Between KEISEI EL and FANDIFI TECHNOLOGY

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

By analyzing existing cross correlation between KEISEI EL RAILWAY and FANDIFI TECHNOLOGY P, you can compare the effects of market volatilities on KEISEI EL and FANDIFI TECHNOLOGY 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 KEISEI EL with a short position of FANDIFI TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEISEI EL and FANDIFI TECHNOLOGY.

Diversification Opportunities for KEISEI EL and FANDIFI TECHNOLOGY

0.0

Correlation Coefficient

KEISEI EL  FANDIFI TECHNOLOGY

Pay attention - limited upside

The 3 months correlation between KEISEI and FANDIFI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KEISEI EL RAILWAY and FANDIFI TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FANDIFI TECHNOLOGY and KEISEI EL 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 KEISEI EL RAILWAY are associated (or correlated) with FANDIFI TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FANDIFI TECHNOLOGY has no effect on the direction of KEISEI EL i.e., KEISEI EL and FANDIFI TECHNOLOGY go up and down completely randomly.

Pair Corralation between KEISEI EL and FANDIFI TECHNOLOGY

Assuming the 90 days trading horizon KEISEI EL RAILWAY is expected to under-perform the FANDIFI TECHNOLOGY. But the stock apears to be less risky and, when comparing its historical volatility, KEISEI EL RAILWAY is 3.86 times less risky than FANDIFI TECHNOLOGY. The stock trades about -0.08 of its potential returns per unit of risk. The FANDIFI TECHNOLOGY P is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  0.15  in FANDIFI TECHNOLOGY P on October 2, 2024 and sell it today you would lose (0.10) from holding FANDIFI TECHNOLOGY P or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KEISEI EL RAILWAY  vs.  FANDIFI TECHNOLOGY P

KEISEI EL RAILWAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEISEI EL RAILWAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, KEISEI EL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

FANDIFI TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KEISEI EL and FANDIFI TECHNOLOGY

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

The idea behind KEISEI EL RAILWAY and FANDIFI TECHNOLOGY P 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .