Correlation Between Fras Le and Honda
Can any of the company-specific risk be diversified away by investing in both Fras Le and Honda 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 Fras Le and Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Honda Motor Co, you can compare the effects of market volatilities on Fras Le and Honda 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 Fras Le with a short position of Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Honda.
Diversification Opportunities for Fras Le and Honda
Good diversification
The 3 months correlation between Fras and Honda is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor and Fras Le 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 Fras le SA are associated (or correlated) with Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Fras Le i.e., Fras Le and Honda go up and down completely randomly.
Pair Corralation between Fras Le and Honda
Assuming the 90 days trading horizon Fras le SA is expected to generate 0.62 times more return on investment than Honda. However, Fras le SA is 1.63 times less risky than Honda. It trades about -0.24 of its potential returns per unit of risk. Honda Motor Co is currently generating about -0.19 per unit of risk. If you would invest 2,233 in Fras le SA on August 26, 2024 and sell it today you would lose (168.00) from holding Fras le SA or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. Honda Motor Co
Performance |
| Timeline |
| Fras le SA |
| Honda Motor |
Fras Le and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Honda
The main advantage of trading using opposite Fras Le and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Fras Le vs. Baidu Inc | Fras Le vs. Deutsche Bank Aktiengesellschaft | Fras Le vs. HSBC Holdings plc | Fras Le vs. The Bank of |
| Honda vs. Marcopolo SA | Honda vs. Randon SA Implementos | Honda vs. Fras le SA | Honda vs. Indstrias Romi SA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |