Correlation Between PSI Software and Fuji Media

Can any of the company-specific risk be diversified away by investing in both PSI Software and Fuji Media 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 PSI Software and Fuji Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PSI Software AG and Fuji Media Holdings, you can compare the effects of market volatilities on PSI Software and Fuji Media 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 PSI Software with a short position of Fuji Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSI Software and Fuji Media.

Diversification Opportunities for PSI Software and Fuji Media

0.05

Correlation Coefficient

PSI Software  Fuji Media

Significant diversification

The 3 months correlation between PSI and Fuji is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding PSI Software AG and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings and PSI Software 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 PSI Software AG are associated (or correlated) with Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of PSI Software i.e., PSI Software and Fuji Media go up and down completely randomly.

Pair Corralation between PSI Software and Fuji Media

Assuming the 90 days trading horizon PSI Software AG is expected to under-perform the Fuji Media. But the stock apears to be less risky and, when comparing its historical volatility, PSI Software AG is 1.25 times less risky than Fuji Media. The stock trades about -0.11 of its potential returns per unit of risk. The Fuji Media Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Fuji Media Holdings on September 13, 2024 and sell it today you would earn a total of  10.00  from holding Fuji Media Holdings or generate 0.94% return on investment over 90 days.

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

PSI Software AG  vs.  Fuji Media Holdings

PSI Software AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PSI Software AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fuji Media Holdings

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fuji Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PSI Software and Fuji Media

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

The idea behind PSI Software AG and Fuji Media Holdings 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.