Correlation Between Furukawa Electric and PetroShale
Can any of the company-specific risk be diversified away by investing in both Furukawa Electric and PetroShale 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 PetroShale 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 PetroShale, you can compare the effects of market volatilities on Furukawa Electric and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Furukawa Electric and PetroShale.
Diversification Opportunities for Furukawa Electric and PetroShale
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Furukawa and PetroShale is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Furukawa Electric Co and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Furukawa Electric i.e., Furukawa Electric and PetroShale go up and down completely randomly.
Pair Corralation between Furukawa Electric and PetroShale
Assuming the 90 days horizon Furukawa Electric Co is expected to generate 4.93 times more return on investment than PetroShale. However, Furukawa Electric is 4.93 times more volatile than PetroShale. It trades about 0.27 of its potential returns per unit of risk. PetroShale is currently generating about -0.2 per unit of risk. If you would invest 2,622 in Furukawa Electric Co on August 29, 2024 and sell it today you would earn a total of 1,178 from holding Furukawa Electric Co or generate 44.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Furukawa Electric Co vs. PetroShale
Performance |
| Timeline |
| Furukawa Electric |
| PetroShale |
Furukawa Electric and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Furukawa Electric and PetroShale
The main advantage of trading using opposite Furukawa Electric and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Furukawa Electric position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale'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 |
| PetroShale vs. Yamaha Motor Co | PetroShale vs. Nitto Denko Corp | PetroShale vs. Farmers Merchants Bancorp | PetroShale vs. Furukawa Electric Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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