Correlation Between Honda and Fleury SA
Can any of the company-specific risk be diversified away by investing in both Honda and Fleury 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 Honda and Fleury SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Motor Co and Fleury SA, you can compare the effects of market volatilities on Honda and Fleury 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 Honda with a short position of Fleury SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and Fleury SA.
Diversification Opportunities for Honda and Fleury SA
Poor diversification
The 3 months correlation between Honda and Fleury is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury SA and Honda 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 Honda Motor Co are associated (or correlated) with Fleury SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury SA has no effect on the direction of Honda i.e., Honda and Fleury SA go up and down completely randomly.
Pair Corralation between Honda and Fleury SA
Assuming the 90 days trading horizon Honda Motor Co is expected to under-perform the Fleury SA. In addition to that, Honda is 1.17 times more volatile than Fleury SA. It trades about -0.24 of its total potential returns per unit of risk. Fleury SA is currently generating about -0.2 per unit of volatility. If you would invest 1,515 in Fleury SA on August 28, 2024 and sell it today you would lose (125.00) from holding Fleury SA or give up 8.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honda Motor Co vs. Fleury SA
Performance |
| Timeline |
| Honda Motor |
| Fleury SA |
Honda and Fleury SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honda and Fleury SA
The main advantage of trading using opposite Honda and Fleury SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda position performs unexpectedly, Fleury 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 Fleury SA will offset losses from the drop in Fleury SA's long position.| Honda vs. Marcopolo SA | Honda vs. Randon SA Implementos | Honda vs. Fras le SA | Honda vs. Indstrias Romi SA |
| Fleury SA vs. Engie Brasil Energia | Fleury SA vs. WEG SA | Fleury SA vs. Ambev SA | Fleury SA vs. M Dias Branco |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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