Correlation Between FUYO GENERAL and Broadwind

Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL and Broadwind 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 Broadwind 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 Broadwind, you can compare the effects of market volatilities on FUYO GENERAL and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and Broadwind.

Diversification Opportunities for FUYO GENERAL and Broadwind

-0.13

Correlation Coefficient

FUYO GENERAL  Broadwind

Good diversification

The 3 months correlation between FUYO and Broadwind is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and Broadwind go up and down completely randomly.

Pair Corralation between FUYO GENERAL and Broadwind

Assuming the 90 days horizon FUYO GENERAL LEASE is expected to generate 0.3 times more return on investment than Broadwind. However, FUYO GENERAL LEASE is 3.35 times less risky than Broadwind. It trades about 0.05 of its potential returns per unit of risk. Broadwind is currently generating about -0.03 per unit of risk. If you would invest  6,850  in FUYO GENERAL LEASE on September 29, 2024 and sell it today you would earn a total of  250.00  from holding FUYO GENERAL LEASE or generate 3.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FUYO GENERAL LEASE  vs.  Broadwind

FUYO GENERAL LEASE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FUYO GENERAL LEASE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FUYO GENERAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Broadwind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadwind has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FUYO GENERAL and Broadwind

The main advantage of trading using opposite FUYO GENERAL and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.

The idea behind FUYO GENERAL LEASE and Broadwind pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.