Correlation Between National Fuel and Fukuyama Transporting

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

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

Diversification Opportunities for National Fuel and Fukuyama Transporting

0.39

Correlation Coefficient

National Fuel  Fukuyama Transporting

Weak diversification

The 3 months correlation between National and Fukuyama is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Fukuyama Transporting Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fukuyama Transporting and National Fuel 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 National Fuel Gas are associated (or correlated) with Fukuyama Transporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fukuyama Transporting has no effect on the direction of National Fuel i.e., National Fuel and Fukuyama Transporting go up and down completely randomly.

Pair Corralation between National Fuel and Fukuyama Transporting

Assuming the 90 days horizon National Fuel Gas is expected to generate 1.29 times more return on investment than Fukuyama Transporting. However, National Fuel is 1.29 times more volatile than Fukuyama Transporting Co. It trades about 0.24 of its potential returns per unit of risk. Fukuyama Transporting Co is currently generating about 0.04 per unit of risk. If you would invest  5,700  in National Fuel Gas on December 21, 2024 and sell it today you would earn a total of  1,550  from holding National Fuel Gas or generate 27.19% return on investment over 90 days.

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

National Fuel Gas  vs.  Fukuyama Transporting Co

National Fuel Gas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Fuel Gas are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, National Fuel reported solid returns over the last few months and may actually be approaching a breakup point.

Fukuyama Transporting

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fukuyama Transporting Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with National Fuel and Fukuyama Transporting

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

The idea behind National Fuel Gas and Fukuyama Transporting Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.