Correlation Between Stanley Electric and FUYO GENERAL
Can any of the company-specific risk be diversified away by investing in both Stanley Electric and FUYO GENERAL 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 Stanley Electric and FUYO GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Electric Co and FUYO GENERAL LEASE, you can compare the effects of market volatilities on Stanley Electric and FUYO GENERAL 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 Stanley Electric with a short position of FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Electric and FUYO GENERAL.
Diversification Opportunities for Stanley Electric and FUYO GENERAL
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stanley and FUYO is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Electric Co and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE and Stanley 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 Stanley Electric Co are associated (or correlated) with FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of Stanley Electric i.e., Stanley Electric and FUYO GENERAL go up and down completely randomly.
Pair Corralation between Stanley Electric and FUYO GENERAL
Assuming the 90 days trading horizon Stanley Electric is expected to generate 3.49 times less return on investment than FUYO GENERAL. In addition to that, Stanley Electric is 1.23 times more volatile than FUYO GENERAL LEASE. It trades about 0.05 of its total potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.21 per unit of volatility. If you would invest 6,650 in FUYO GENERAL LEASE on September 21, 2024 and sell it today you would earn a total of 350.00 from holding FUYO GENERAL LEASE or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Electric Co vs. FUYO GENERAL LEASE
Performance |
| Timeline |
| Stanley Electric |
| FUYO GENERAL LEASE |
Stanley Electric and FUYO GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Electric and FUYO GENERAL
The main advantage of trading using opposite Stanley Electric and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Electric position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.| Stanley Electric vs. FUYO GENERAL LEASE | Stanley Electric vs. RETAIL FOOD GROUP | Stanley Electric vs. PICKN PAY STORES | Stanley Electric vs. United Rentals |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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