Correlation Between International Business and FUJITSU
Can any of the company-specific risk be diversified away by investing in both International Business and FUJITSU 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 International Business and FUJITSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and FUJITSU LTD ADR, you can compare the effects of market volatilities on International Business and FUJITSU 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 International Business with a short position of FUJITSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and FUJITSU.
Diversification Opportunities for International Business and FUJITSU
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between International and FUJITSU is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR and International Business 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 International Business Machines are associated (or correlated) with FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of International Business i.e., International Business and FUJITSU go up and down completely randomly.
Pair Corralation between International Business and FUJITSU
Assuming the 90 days horizon International Business Machines is expected to generate 0.61 times more return on investment than FUJITSU. However, International Business Machines is 1.64 times less risky than FUJITSU. It trades about 0.17 of its potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.08 per unit of risk. If you would invest 15,128 in International Business Machines on September 3, 2024 and sell it today you would earn a total of 6,457 from holding International Business Machines or generate 42.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. FUJITSU LTD ADR
Performance |
| Timeline |
| International Business |
| FUJITSU LTD ADR |
International Business and FUJITSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and FUJITSU
The main advantage of trading using opposite International Business and FUJITSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, FUJITSU 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 FUJITSU will offset losses from the drop in FUJITSU's long position.| International Business vs. FUJITSU LTD ADR | International Business vs. Superior Plus Corp | International Business vs. NMI Holdings | International Business vs. Origin Agritech |
| FUJITSU vs. Eidesvik Offshore ASA | FUJITSU vs. Singapore Telecommunications Limited | FUJITSU vs. Consolidated Communications Holdings | FUJITSU vs. Iridium Communications |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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