Correlation Between Canon and Fujitsu
Can any of the company-specific risk be diversified away by investing in both Canon 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 Canon and Fujitsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canon Inc and Fujitsu Limited, you can compare the effects of market volatilities on Canon 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 Canon with a short position of Fujitsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and Fujitsu.
Diversification Opportunities for Canon and Fujitsu
Significant diversification
The 3 months correlation between Canon and Fujitsu is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and Fujitsu Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujitsu Limited and Canon 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 Canon Inc 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 Limited has no effect on the direction of Canon i.e., Canon and Fujitsu go up and down completely randomly.
Pair Corralation between Canon and Fujitsu
Assuming the 90 days trading horizon Canon is expected to generate 1.19 times less return on investment than Fujitsu. But when comparing it to its historical volatility, Canon Inc is 1.46 times less risky than Fujitsu. It trades about 0.08 of its potential returns per unit of risk. Fujitsu Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Fujitsu Limited on September 14, 2024 and sell it today you would earn a total of 546.00 from holding Fujitsu Limited or generate 44.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canon Inc vs. Fujitsu Limited
Performance |
| Timeline |
| Canon Inc |
| Fujitsu Limited |
Canon and Fujitsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canon and Fujitsu
The main advantage of trading using opposite Canon and Fujitsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon 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.| Canon vs. Direct Line Insurance | Canon vs. MAGNUM MINING EXP | Canon vs. SIEM OFFSHORE NEW | Canon vs. MINCO SILVER |
| Fujitsu vs. Cognizant Technology Solutions | Fujitsu vs. Superior Plus Corp | Fujitsu vs. SIVERS SEMICONDUCTORS AB | Fujitsu vs. Norsk Hydro ASA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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