Correlation Between Furukawa Electric and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Furukawa Electric and Legrand SA 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 Furukawa Electric and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Furukawa Electric Co and Legrand SA ADR, you can compare the effects of market volatilities on Furukawa Electric and Legrand SA 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 Furukawa Electric with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Furukawa Electric and Legrand SA.
Diversification Opportunities for Furukawa Electric and Legrand SA
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Furukawa and Legrand is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Furukawa Electric Co and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR and Furukawa Electric 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 Furukawa Electric Co are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA ADR has no effect on the direction of Furukawa Electric i.e., Furukawa Electric and Legrand SA go up and down completely randomly.
Pair Corralation between Furukawa Electric and Legrand SA
Assuming the 90 days horizon Furukawa Electric Co is expected to generate 2.39 times more return on investment than Legrand SA. However, Furukawa Electric is 2.39 times more volatile than Legrand SA ADR. It trades about 0.1 of its potential returns per unit of risk. Legrand SA ADR is currently generating about 0.05 per unit of risk. If you would invest 1,563 in Furukawa Electric Co on September 12, 2024 and sell it today you would earn a total of 2,237 from holding Furukawa Electric Co or generate 143.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 60.93% |
| Values | Daily Returns |
Furukawa Electric Co vs. Legrand SA ADR
Performance |
| Timeline |
| Furukawa Electric |
| Legrand SA ADR |
Furukawa Electric and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Furukawa Electric and Legrand SA
The main advantage of trading using opposite Furukawa Electric and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Furukawa Electric position performs unexpectedly, Legrand SA 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Furukawa Electric vs. FREYR Battery SA | Furukawa Electric vs. nVent Electric PLC | Furukawa Electric vs. Hubbell | Furukawa Electric vs. Advanced Energy Industries |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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