Correlation Between FUYO GENERAL and Warner Music
Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL and Warner Music 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 FUYO GENERAL and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUYO GENERAL LEASE and Warner Music Group, you can compare the effects of market volatilities on FUYO GENERAL and Warner Music 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 FUYO GENERAL with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and Warner Music.
Diversification Opportunities for FUYO GENERAL and Warner Music
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FUYO and Warner is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group and FUYO GENERAL 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 FUYO GENERAL LEASE are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and Warner Music go up and down completely randomly.
Pair Corralation between FUYO GENERAL and Warner Music
Assuming the 90 days horizon FUYO GENERAL is expected to generate 2.35 times less return on investment than Warner Music. But when comparing it to its historical volatility, FUYO GENERAL LEASE is 1.29 times less risky than Warner Music. It trades about 0.05 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,751 in Warner Music Group on September 30, 2024 and sell it today you would earn a total of 251.00 from holding Warner Music Group or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FUYO GENERAL LEASE vs. Warner Music Group
Performance |
| Timeline |
| FUYO GENERAL LEASE |
| Warner Music Group |
FUYO GENERAL and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUYO GENERAL and Warner Music
The main advantage of trading using opposite FUYO GENERAL and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.| FUYO GENERAL vs. Ashtead Group plc | FUYO GENERAL vs. WillScot Mobile Mini | FUYO GENERAL vs. Avis Budget Group | FUYO GENERAL vs. Sixt SE |
| Warner Music vs. Chunghwa Telecom Co | Warner Music vs. KB HOME | Warner Music vs. Haier Smart Home | Warner Music vs. Autohome ADR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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