Correlation Between Richter Gedeon and Fukuyama Transporting

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

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

Diversification Opportunities for Richter Gedeon and Fukuyama Transporting

0.47

Correlation Coefficient

Richter Gedeon  Fukuyama Transporting

Very weak diversification

The 3 months correlation between Richter and Fukuyama is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Richter Gedeon Vegyszeti and Fukuyama Transporting Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fukuyama Transporting and Richter Gedeon 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 Richter Gedeon Vegyszeti 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 Richter Gedeon i.e., Richter Gedeon and Fukuyama Transporting go up and down completely randomly.

Pair Corralation between Richter Gedeon and Fukuyama Transporting

Assuming the 90 days trading horizon Richter Gedeon is expected to generate 1.93 times less return on investment than Fukuyama Transporting. But when comparing it to its historical volatility, Richter Gedeon Vegyszeti is 1.09 times less risky than Fukuyama Transporting. It trades about 0.03 of its potential returns per unit of risk. Fukuyama Transporting Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,875  in Fukuyama Transporting Co on September 4, 2024 and sell it today you would earn a total of  465.00  from holding Fukuyama Transporting Co or generate 24.8% return on investment over 90 days.

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

Richter Gedeon Vegyszeti  vs.  Fukuyama Transporting Co

Richter Gedeon Vegyszeti

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fukuyama Transporting

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fukuyama Transporting Co are ranked lower than 1 (%) 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 Richter Gedeon and Fukuyama Transporting

The main advantage of trading using opposite Richter Gedeon and Fukuyama Transporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richter Gedeon 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 Richter Gedeon Vegyszeti 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.