Correlation Between China Communications and FUJITSU
Can any of the company-specific risk be diversified away by investing in both China Communications and FUJITSU 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 China Communications and FUJITSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and FUJITSU LTD ADR, you can compare the effects of market volatilities on China Communications and FUJITSU 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 China Communications with a short position of FUJITSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and FUJITSU.
Diversification Opportunities for China Communications and FUJITSU
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and FUJITSU is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR and China Communications 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 China Communications Services are associated (or correlated) with FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of China Communications i.e., China Communications and FUJITSU go up and down completely randomly.
Pair Corralation between China Communications and FUJITSU
Assuming the 90 days horizon China Communications Services is expected to generate 2.99 times more return on investment than FUJITSU. However, China Communications is 2.99 times more volatile than FUJITSU LTD ADR. It trades about 0.09 of its potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.07 per unit of risk. If you would invest 18.00 in China Communications Services on September 14, 2024 and sell it today you would earn a total of 33.00 from holding China Communications Services or generate 183.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. FUJITSU LTD ADR
Performance |
| Timeline |
| China Communications |
| FUJITSU LTD ADR |
China Communications and FUJITSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and FUJITSU
The main advantage of trading using opposite China Communications and FUJITSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, FUJITSU 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 FUJITSU will offset losses from the drop in FUJITSU's long position.| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
| FUJITSU vs. PennyMac Mortgage Investment | FUJITSU vs. Charter Communications | FUJITSU vs. ETFS Coffee ETC | FUJITSU vs. Apollo Investment Corp |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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