Correlation Between Signify NV and Fuji Electric

Can any of the company-specific risk be diversified away by investing in both Signify NV and Fuji Electric 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 Signify NV and Fuji Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Signify NV and Fuji Electric Co, you can compare the effects of market volatilities on Signify NV and Fuji Electric 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 Signify NV with a short position of Fuji Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signify NV and Fuji Electric.

Diversification Opportunities for Signify NV and Fuji Electric

-0.37

Correlation Coefficient

Signify NV  Fuji Electric

Very good diversification

The 3 months correlation between Signify and Fuji is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Signify NV and Fuji Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Electric and Signify NV 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 Signify NV are associated (or correlated) with Fuji Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Electric has no effect on the direction of Signify NV i.e., Signify NV and Fuji Electric go up and down completely randomly.

Pair Corralation between Signify NV and Fuji Electric

Assuming the 90 days horizon Signify NV is expected to generate 5.04 times less return on investment than Fuji Electric. In addition to that, Signify NV is 1.07 times more volatile than Fuji Electric Co. It trades about 0.01 of its total potential returns per unit of risk. Fuji Electric Co is currently generating about 0.04 per unit of volatility. If you would invest  1,391  in Fuji Electric Co on September 12, 2024 and sell it today you would earn a total of  57.00  from holding Fuji Electric Co or generate 4.1% return on investment over 90 days.

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

Signify NV  vs.  Fuji Electric Co

Signify NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signify NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Signify NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fuji Electric

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Electric Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Fuji Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Signify NV and Fuji Electric

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

The idea behind Signify NV and Fuji Electric Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.