Correlation Between Full Truck and Rohm Co

Can any of the company-specific risk be diversified away by investing in both Full Truck and Rohm Co 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 Full Truck and Rohm Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Full Truck Alliance and Rohm Co Ltd, you can compare the effects of market volatilities on Full Truck and Rohm Co 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 Full Truck with a short position of Rohm Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Full Truck and Rohm Co.

Diversification Opportunities for Full Truck and Rohm Co

-0.44

Correlation Coefficient

Full Truck  Rohm Co

Very good diversification

The 3 months correlation between Full and Rohm is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance and Rohm Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rohm Co and Full Truck 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 Full Truck Alliance are associated (or correlated) with Rohm Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rohm Co has no effect on the direction of Full Truck i.e., Full Truck and Rohm Co go up and down completely randomly.

Pair Corralation between Full Truck and Rohm Co

Considering the 90-day investment horizon Full Truck Alliance is expected to generate 2.3 times more return on investment than Rohm Co. However, Full Truck is 2.3 times more volatile than Rohm Co Ltd. It trades about 0.25 of its potential returns per unit of risk. Rohm Co Ltd is currently generating about -0.04 per unit of risk. If you would invest  937.00  in Full Truck Alliance on September 23, 2024 and sell it today you would earn a total of  195.00  from holding Full Truck Alliance or generate 20.81% return on investment over 90 days.

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

Full Truck Alliance  vs.  Rohm Co Ltd

Full Truck Alliance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Full Truck displayed solid returns over the last few months and may actually be approaching a breakup point.

Rohm Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rohm Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Full Truck and Rohm Co

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

The idea behind Full Truck Alliance and Rohm Co Ltd 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.